Circular Letters

Circular letters announce news, policy, and guidance from the Board of Governors.

2012

October 04, 2012
Minutes of the Federal Open Market Committee, September 12-13, 2012

The Federal Reserve Board and the Federal Open Market Committee on Thursday released the attached minutes of the Committee meeting held on September 12–13, 2012. A summary of economic projections made by Federal Reserve Board members and Reserve Bank presidents for the September 12–13, 2012 meeting is also included as an addendum to these minutes.

The minutes for each regularly scheduled meeting of the Committee ordinarily are made available three weeks after the day of the policy decision and subsequently are published in the Board's Annual Report. Summaries of economic projections are released on a quarterly schedule. The descriptions of economic and financial conditions contained in these minutes and in the Summary of Economic Projections are based solely on the information that was available to the Committee at the time of the meeting.

The FOMC minutes can be viewed on the Board's website at http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm.

Minutes of the Federal Open Market Committee
September 12-13, 2012: HTML | PDF

September 28, 2012
Federal Reserve Publishes Quarterly Data for Discount Window Lending and Open Market Transactions

The Federal Reserve on Friday began the quarterly publication of transaction-level information related to discount window lending to depository institutions and open market transactions. The data in the initial release cover transactions between July 22, 2010 and September 30, 2010. The transaction-level detail supplements the extensive aggregate information the Federal Reserve has previously provided in weekly, monthly, and quarterly reports.

Data on discount window loans include the name of the borrowing institution, the amount borrowed, the interest rate charged, and information about collateral pledged.

Data on open market transactions include temporary and permanent purchases and sales of Treasury and agency securities, securities lending activities, and foreign exchange transactions and foreign currency reserve investments. Information on each transaction includes the identity of the counterparty, the security or currency purchased or sold, and the date, amount, and price of the transaction.

In December 2010, the Federal Reserve released detailed information about individual credit and other transactions conducted during the financial crisis. In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, transaction-level details for discount window loans and open market transactions will be made available on a quarterly basis and with an approximately two-year lag. Information is available through the Federal Reserve Board's website and the Federal Reserve Bank of New York's website.

September 26, 2012
Agencies Reopen Comment Period on Swap Margin and Capital Proposed Rulemaking

Five federal agencies on Wednesday reopened the comment period on a proposed rule to establish margin and capital requirements for swap dealers, major swap participants, security-based swap dealers, and major security-based swap participants for which one of the agencies is the prudential regulator, as required by sections 731 and 764 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The comment period—which originally ended July 11, 2011—was reopened to November 26, 2012, to allow interested persons more time to analyze the issues and prepare their comments in light of the consultative document on margin requirements for noncentrally-cleared derivatives recently published for comment by the Basel Committee on Banking Supervision and the International Organization of Securities Commissions.

Attachment (40 KB PDF)

September 24, 2012
Agencies Release a Regulatory Capital Estimation Tool to Assist in Assessing the Potential Effects of Recently Proposed Regulatory Capital Rules

The federal banking regulatory agencies on Monday announced the availability of a regulatory capital estimation tool to help community banking organizations and other interested parties evaluate recently published regulatory capital proposals. The tool will assist these organizations in estimating the potential effects on their capital ratios of the agencies' Basel III Notice of Proposed Rulemaking (NPR) and Standardized Approach NPR.

In June 2012, the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency approved joint proposals for comment that would revise their current regulatory capital standards. The public comment period for these proposals ends on October 22, 2012. The Basel III NPR focuses primarily on strengthening the level of regulatory capital requirements and improving the quality of capital. The Standardized Approach NPR proposes a number of enhancements to the risk-sensitivity of the agencies' capital standards.

The tool is intended to help institutions estimate the potential effect the proposals could have on their capital ratios. It should not be relied on as an indicator of an institution's actual regulatory capital ratios and is not part of the NPRs nor of any final rule(s) that the agencies may adopt.

The estimation tool is available for banks and savings associations here.

The estimation tool is available for bank and savings and loan holding companies here.

The proposals are available in the Federal Register at:
Basel III NPR (PDF)
Standardized Approach NPR (PDF)

September 13, 2012
Federal Reserve Board and Federal Open Market Committee Release Economic Projections From the September 12–13 FOMC Meeting

The Federal Reserve Board and the Federal Open Market Committee on Thursday released the attached table and charts summarizing the economic projections and the target federal funds rate projections made by Federal Reserve Board members and Federal Reserve Bank presidents for the September 12–13 meeting of the Committee.

The table will be incorporated into a summary of economic projections released with the minutes of the September 12–13 meeting. Summaries of economic projections are released on a quarterly schedule.

Projections materials (PDF)

September 13, 2012
Federal Reserve Issues FOMC Statement

Information received since the Federal Open Market Committee met in August suggests that economic activity has continued to expand at a moderate pace in recent months. Growth in employment has been slow, and the unemployment rate remains elevated. Household spending has continued to advance, but growth in business fixed investment appears to have slowed. The housing sector has shown some further signs of improvement, albeit from a depressed level. Inflation has been subdued, although the prices of some key commodities have increased recently. Longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee is concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely would run at or below its 2 percent objective.

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the Committee's holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

The Committee will closely monitor incoming information on economic and financial developments in coming months. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.

To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who opposed additional asset purchases and preferred to omit the description of the time period over which exceptionally low levels for the federal funds rate are likely to be warranted.

Statement Regarding Transactions in Agency Mortgage-Backed Securities and Treasury Securities (195 KB PDF)

September 11, 2012
Federal Reserve Announces Results of Auction of $3 Billion in 28-Day Term Deposits Held on September 10, 2012

On September 10, 2012, the Federal Reserve conducted an auction of $3 billion in 28-day term deposits through its Term Deposit Facility. Following are the results of the auction:

Bids at the stop-out rate were pro-rated at 84.74 percent. Resulting awards were rounded to the nearest $10,000 except that all awards below $10,000 were rounded up to $10,000.

The awarded deposits will settle on September 13, 2012, and will mature on October 11, 2012. The stop-out rate shown above will apply to all awarded deposits.

September 05, 2012
Federal Reserve Offers $3 Billion in 28-Day Term Deposits through Its Term Deposit Facility

On Monday, September 10, 2012, the Federal Reserve will offer $3 billion in 28-day term deposits through its Term Deposit Facility. As noted in the Federal Reserve Board's September 8, 2010 release, this offering is part of ongoing small-value operations designed to provide eligible institutions with an opportunity to become familiar with term deposit operations. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation D, and the terms and conditions of the Term Deposit Facility (http://www.frbservices.org/centralbank/term_deposit_facility.html).

Description of Offering and Competitive Auction Parameters

Competitive bids submitted at the stop-out rate will be pro-rated and will be rounded to multiples of $10,000. Normal rounding convention will be used, except that awards under $10,000 will be rounded to $10,000.

Non-Competitive bids are allowed in this auction. All non-competitive bids will be automatically awarded in full at the stop-out rate of the competitive auction. The minimum amount for a non-competitive bid is $10,000; the maximum amount is $5,000,000 and should be submitted in increments of $10,000. Non-Competitive bids must be submitted between 10:00 a.m. ET and 2:00 p.m. ET on the auction date.

Submission of Bids

Participants must submit bids by accessing the Term Deposit Facility application (https://www.federalreserve.org/arrow/ARROWWeb/home.do) between the opening time and the closing time on the auction date.

Notification

Summary auction results will be published on the Board of Governors' website (http://www.federalreserve.gov/monetarypolicy/tdf.htm) at approximately 12:00 p.m. (noon) ET on the notification date. Soon after, results will be posted on the Term Deposit Facility Resource Center page of the Central Bank Central website (http://www.frbservices.org/centralbank/term_deposit_facility.html). Participant awards will be posted to the Term Deposit Facility application at approximately 12:00 p.m. ET on the notification date, and participants will be able to view their awards by accessing the Term Deposit Facility application.

August 27, 2012
Federal Reserve Board Considering Changes to the Implementation Timeline for the Dodd-Frank Company-Run Stress Test Requirements

The Federal Reserve Board is considering changes to the implementation timeline for the annual company-run stress test requirements required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The changes under consideration would delay implementation until September 2013 for bank holding companies, state member banks, and savings and loan holding companies with between $10 billion and $50 billion in total consolidated assets.

The Federal Reserve in December 2011 issued a notice of proposed rulemaking to implement the enhanced prudential standards and early remediation requirements established under the Dodd-Frank Act. The December 2011 proposal would require all bank holding companies and state member banks with more than $10 billion in total consolidated assets to comply with the requirements to conduct an annual company-run stress test beginning on the effective date of the final rule. The December 2011 proposal would also require all savings and loan holding companies with more than $10 billion in assets to comply with the annual company-run stress test requirements once those holding companies become subject to minimum risk-based capital requirements.

A number of commenters on the proposal raised concerns about the proposed timing of compliance with the company-run stress test requirements, specifically questioning if all institutions would have the resources, readiness, and ability to conduct stress tests given the likely short period between publication of a final rule and the start of the stress testing process. A key priority in implementing the stress testing requirements of the Dodd-Frank Act is to ensure that companies have robust systems and processes to conduct the stress tests. In response to the concerns expressed in comments, the Board is considering delaying the effective date of the rule to conduct the annual stress tests for bank holding companies, state member banks, and savings and loan holding companies with between $10 billion and $50 billion in total consolidated assets. The delay under consideration would help ensure that these companies have sufficient time to develop high-quality stress testing programs.

As part of efforts among the federal banking agencies to coordinate the implementation of Dodd-Frank stress testing requirements, the Federal Reserve has consulted on this proposed implementation delay with the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC). The OCC and FDIC are considering similar changes to timelines included in their proposed rules implementing Dodd-Frank stress test requirements.

Additional details about the timing and scope of Dodd-Frank stress test requirements for bank holding companies, state member banks, and savings and loan holding companies with between $10 billion and $50 billion in total consolidated assets will be included in a forthcoming final rule.

For media inquiries, call 202-452-2955

August 27, 2012
Federal Reserve Board Begins Practice of Publishing Reserve Bank Financial Reports on a Quarterly Basis

The Federal Reserve Board on Monday began the practice of publishing unaudited combined Federal Reserve Bank financial reports on a quarterly basis. This enhancement to the Board's previous financial reporting procedures will provide greater transparency by communicating financial information on a more frequent basis and in greater detail.

To access financial reports for the first and second quarters of 2012, visit www.federalreserve.gov/monetarypolicy/bst_fedfinancials.htm#quarterly. Reserve Bank financial information for the third quarter will be released within 60 days of the quarter's end.

The Board for many years has published annual financial statements for the Board of Governors and the Reserve Banks, audited by an independent audit firm. To access the most recent annual financial statements, visit www.federalreserve.gov/monetarypolicy/bst_fedfinancials.htm. And, for additional information on the auditing of the Federal Reserve, visit www.federalreserve.gov/faqs/about_12784.htm.

2012 Q1 (PDF)
2012 Q2 (PDF)

For media inquiries, call 202-452-2955.

August 22, 2012
Minutes of the Federal Open Market Committee, July 31-August 1, 2012

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on July 31-August 1, 2012.

The minutes for each regularly scheduled meeting of the Committee ordinarily are made available three weeks after the day of the policy decision and subsequently are published in the Board's Annual Report. The descriptions of economic and financial conditions contained in these minutes are based solely on the information that was available to the Committee at the time of the meeting.

The FOMC minutes can be viewed on the Board's website at http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm

Minutes of Federal Open Market Committee
July 31 - August 1, 2012: PDF | HTML

For media inquiries, call 202-452-2955

August 15, 2012
Agencies Issue Proposed Rule on Appraisals for Higher-Risk Mortgages

WASHINGTON--Six federal financial regulatory agencies today issued a proposed rule to establish new appraisal requirements for "higher-risk mortgage loans." The proposed rule would implement amendments to the Truth in Lending Act enacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Under the Dodd-Frank Act, mortgage loans are higher-risk if they are secured by a consumer's home and have interest rates above a certain threshold.

For higher-risk mortgage loans, the proposed rule would require creditors to use a licensed or certified appraiser who prepares a written report based on a physical inspection of the interior of the property. The proposed rule also would require creditors to disclose to applicants information about the purpose of the appraisal and provide consumers with a free copy of any appraisal report.

Creditors would have to obtain an additional appraisal at no cost to the consumer for a home-purchase higher-risk mortgage loan if the seller acquired the property for a lower price during the past six months. This requirement would address fraudulent property flipping by seeking to ensure that the value of the property being used as collateral for the loan legitimately increased.

The proposed rule is being issued by the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the National Credit Union Administration, and the Office of the Comptroller of the Currency.

The Federal Register notice is attached. The agencies are seeking comments from the public on all aspects of the proposal. The public will have 60 days, or until October 15, 2012, to review and comment on most of the proposal. However, comments related to the proposed Paperwork Reduction Act analysis will be due 60 days after the rule is published in the Federal Register. Publication of the proposal in the Federal Register is expected shortly.

Attachment (1.28 MB PDF)

August 02, 2012
Deadline to Request Independent Foreclosure Review Extended to December 31

Borrowers seeking a review of their mortgage foreclosures under the federal banking agencies' Independent Foreclosure Review now have until December 31, 2012, to submit their requests.

The Office of the Comptroller of the Currency (OCC) and the Board of Governors of the Federal Reserve System (Federal Reserve) today announced that the deadline for submitting requests for review under the Independent Foreclosure Review has been extended. The new deadline provides additional time for borrowers to request a review if they believe they suffered financial injury as a result of errors in foreclosure actions on their homes in 2009 or 2010 by one of the servicers covered by enforcement actions issued in April 2011.

The deadline extension provides more time to increase awareness about the Independent Foreclosure Review and how eligible borrowers may request a review, and to encourage the broadest participation possible. The agencies will work with the servicers to expand their outreach and marketing efforts through the end of the year to encourage as much participation as possible.

As part of enforcement actions issued in April 2011, the agencies required 14 large mortgage servicers to retain independent consultants to conduct a comprehensive review of foreclosure activity in 2009 and 2010 to identify borrowers who may have been financially injured due to errors, misrepresentations, or other deficiencies in the foreclosure process. If the review finds that financial injury occurred, the borrower may receive remediation such as lump-sum payments, suspension or rescission of a foreclosure, a loan modification or other loss mitigation assistance, correction of credit reports, or correction of deficiency amounts and records. Lump-sum payments can range from $500 to, in the most egregious cases, $125,000 plus equity, according to guidance issued by the agencies.

Requesting a review does not preclude borrowers from taking other actions related to their foreclosures. A servicer is not permitted to require a borrower to sign a waiver of the borrower's ability to pursue claims against the servicer in order to receive compensation under the Independent Foreclosure Review.

There are no costs associated with being included in the review. More information, including how to apply online, is available at http://www.independentforeclosurereview.com.

August 01, 2012
Federal Reserve Issues FOMC Statement

Information received since the Federal Open Market Committee met in June suggests that economic activity decelerated somewhat over the first half of this year. Growth in employment has been slow in recent months, and the unemployment rate remains elevated. Business fixed investment has continued to advance. Household spending has been rising at a somewhat slower pace than earlier in the year. Despite some further signs of improvement, the housing sector remains depressed. Inflation has declined since earlier this year, mainly reflecting lower prices of crude oil and gasoline, and longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects economic growth to remain moderate over coming quarters and then to pick up very gradually. Consequently, the Committee anticipates that the unemployment rate will decline only slowly toward levels that it judges to be consistent with its dual mandate. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee anticipates that inflation over the medium term will run at or below the rate that it judges most consistent with its dual mandate.

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

The Committee also decided to continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. The Committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who preferred to omit the description of the time period over which economic conditions are likely to warrant an exceptionally low level of the federal funds rate.

July 30, 2012
Federal Reserve Board Announces Final Rule Establishing Risk-Management Standards for Financial Market Utilities (FMUs) Designated as Systemically Important by the Financial Stability Oversight Council

The Federal Reserve Board on Monday announced the approval of a final rule establishing risk-management standards for certain financial market utilities (FMUs) designated as systemically important by the Financial Stability Oversight Council. The final rule also establishes requirements for advance notice of proposed material changes to the rules, procedures, or operations of certain designated FMUs. FMUs, such as payment systems, central securities depositories, and central counterparties, provide the infrastructure to clear and settle payments and other financial transactions.

The final rule (Regulation HH) implements two provisions of Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). It establishes risk-management standards governing the operations related to the payment, clearing, and settlement activities of designated FMUs, except those registered as clearing agencies with the Securities and Exchange Commission or as derivatives clearing organizations with the Commodity Futures Trading Commission. The risk-management standards are based on the recognized international standards developed by the Committee on Payment and Settlement Systems (CPSS) and the Technical Committee of the International Organization of Securities Commissions (IOSCO) that were in existence at the time of the proposed rulemaking, which were incorporated previously into the Board's Policy on Payment System Risk.¹

The final rule also establishes requirements for advance notice of proposed material changes to the rules, procedures, or operations of a designated FMU for which the Board is the supervisory agency under Title VIII of the Dodd-Frank Act. The advance notice requirements set the threshold above which a proposed change would be considered material and thus require an advance notice to the Board, and also include provisions on the length of the review period.

The final rule is substantively similar to the proposed rulemaking, with two exceptions. The final rule includes a new provision that would allow the Board to waive the application of certain Regulation HH standards to a particular type of designated FMU, where the risks presented by or the design of that designated FMU would make application of certain standards inappropriate. In addition, the Board has revised the illustrative list of changes that do not require an advance notice, in part to include changes to a designated FMU's fees, prices, or other charges.

The final rule will be effective on September 14, 2012.

Board Votes

For media inquiries, call 202-452-2955

Attachment (311 KB PDF)

^1. In April 2012, CPSS and IOSCO completed an extensive review of those standards and issued the final report on the "Principles for Financial Market Infrastructures" (PFMI), which includes an updated, harmonized, and strengthened set of international risk-management standards applicable to FMUs. (See Board press release on the PFMI.) The Board expects to review the PFMI, consult with other appropriate agencies and the Council, and seek public comment on the adoption of revised Regulation HH standards based on the PFMI.

July 27, 2012
Federal Reserve Board Approves Final Rule Permitting Debit Card Issuers to Receive Fraud-Prevention Adjustment

The Federal Reserve Board on Friday announced the approval of a final rule that amends the provisions in Regulation II (Debit Card Interchange Fees and Routing) that permit a debit card issuer subject to the interchange fee standards to receive a fraud-prevention adjustment. The final rule revises provisions that are currently in effect as an interim final rule.

Under the final rule, an issuer will be eligible for an adjustment of no more than 1 cent per transaction--the same amount as in the interim final rule--if it develops and implements policies and procedures that are designed to reduce the occurrence and costs of fraudulent debit card transactions. The final rule makes changes simplifying the elements required to be included in an issuer's fraud-prevention policies and procedures. To receive an adjustment, an issuer will be required to review its fraud-prevention policies and procedures, and their implementation, at least annually. An issuer also will be required to update its policies and procedures as necessary in light of their effectiveness and cost-effectiveness and, as currently required, in light of changes in the types of fraud and available methods of fraud-prevention.

The final rule retains and clarifies the requirement that an issuer that meets these standards and wishes to receive the adjustment must annually notify the payment card networks in which it participates of its eligibility to receive the adjustment. In addition, the final rule explicitly prohibits an issuer from receiving or charging a fraud-prevention adjustment if the issuer is substantially noncompliant with the Board's fraud-prevention standards and describes steps an issuer must take once it becomes substantially noncompliant to become eligible to receive the fraud-prevention adjustment in the future.

The amendments are effective on October 1, 2012.

For media inquiries, call 202-452-2955

Attachment (187 KB PDF)

July 19, 2012
Federal Reserve Board Reaffirms Long-Standing Policy of Applying Relevant International Risk-Management Standards to Fedwire Funds and Fedwire Securities Services

The Federal Reserve Board on Thursday reaffirmed its long-standing policy of applying relevant international risk-management standards to the Federal Reserve Banks' Fedwire funds and Fedwire securities services. These services play a critical role in the financial system and in facilitating the safe and efficient settlement of private-sector financial market utilities.

The Board's announcement follows the Financial Stability Oversight Council's (FSOC) final designation of eight financial market utilities as systemically important for purposes of implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Under the Federal Reserve Act, the Board has supervisory authority over the Reserve Banks, including the Reserve Banks' provision of payment and settlement services. The Board is committed to the strong and effective supervision of the Reserve Banks and recognizes that critical Reserve Bank payment and settlement services should be subject to rigorous and comprehensive supervision that is comparable to or exceeds the supervision of similar private-sector payment and settlement arrangements.

The Board's examination framework for Fedwire is consistent with the framework that will be used by the Federal Reserve for financial market utilities designated as systemically important by the FSOC and supervised by the Board. In addition, the Board is ensuring that the Reserve Banks are held to procedural requirements with respect to Board review of proposed material changes to Fedwire rules, procedures, and operations that are the same as, or higher than, the requirements for designated financial market utilities.

In the coming months, the Board will be seeking comment on revisions to its Payments System Risk (PSR) policy to take into account the new Principles for Financial Market.

Infrastructures that were issued in April by the Committee on Payment and Settlement Systems and the Technical Committee of the International Organization of Securities Commissions. The PSR policy, among other things, sets forth the Board's views and risk-management expectations for various payment and settlement systems, including those operated by the Reserve Banks.

For media inquiries, call 202-452-2955.

July 17, 2012
Federal Reserve Announces Results of Auction of $3 Billion in 28-Day Term Deposits Held on July 16, 2012

On July 16, 2012, the Federal Reserve conducted an auction of $3 billion in 28-day term deposits through its Term Deposit Facility. Following are the results of the auction:

Bids at the stop-out rate were pro-rated at 96.66 percent. Resulting awards were rounded to the nearest $10,000 except that all awards below $10,000 were rounded up to $10,000.

The awarded deposits will settle on July 19, 2012, and will mature on August 16, 2012. The stop-out rate shown above will apply to all awarded deposits.

July 12, 2012
Federal Reserve Board Issues Supervisory Guidance for New Optional Pre-filing Process for an Applicant to Request a Response on a Potential Bank Acquisition or Other Proposal

The Federal Reserve on Thursday issued supervisory guidance describing a new optional process for an applicant to request a response on a potential bank acquisition or other proposal before the submission of a formal application or notice.

Federal Reserve System staff will review submitted questions about potential filings, otherwise known as pre-filings, before the submission of formal filings. Pre-filings may include a variety of information such as business plans, presentations outlining potential proposals, or other items about which potential applicants may have questions. This process is expected to benefit community banking organizations that do not file applications frequently and also pre-filers with novel proposals.

Pre-filings should be submitted to the appropriate Reserve Bank or through the System's Electronic Applications System, E-Apps. The Federal Reserve anticipates that the review of pre-filings will take no more than 60 days. While most types of pre-filings should take considerably less than 60 days to review, the evaluation of complex or novel proposals may require the full 60 days or longer.

For media inquiries, call 202-452-2955.

SR letter 12-12/CA 12-11

July 11, 2012
Minutes of the Federal Open Market Committee, June 19-20, 2012

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on June 19-20, 2012. A summary of economic projections made by Federal Reserve Board members and Reserve Bank presidents for the June 19-20, 2012 meeting is also included as an addendum to these minutes.

The minutes for each regularly scheduled meeting of the Committee ordinarily are made available three weeks after the day of the policy decision and subsequently are published in the Board's Annual Report. Summaries of economic projections are released on an approximately quarterly schedule. The descriptions of economic and financial conditions contained in these minutes and in the Summary of Economic Projections are based solely on the information that was available to the Committee at the time of the meeting.

The FOMC minutes can be viewed on the Board's website at http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm

Minutes of Federal Open Market Committee
June 19-20, 2012: PDF | HTML

July 11, 2012
Federal Reserve Offers $3 Billion in 28-day Term Deposits through its Term Deposit Facility

On Monday, July 16, 2012, the Federal Reserve will offer $3 billion in 28-day term deposits through its Term Deposit Facility. As noted in the Federal Reserve Board's September 8, 2010 release, this offering is part of ongoing small-value operations designed to provide eligible institutions with an opportunity to become familiar with term deposit operations. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation D, and the terms and conditions of the Term Deposit Facility (http://www.frbservices.org/centralbank/term_deposit_facility.html).

Description of Offering and Competitive Auction Parameters

Competitive bids submitted at the stop-out rate will be pro-rated and will be rounded to multiples of $10,000. Normal rounding convention will be used, except that awards under $10,000 will be rounded to $10,000.

Non-Competitive bids are allowed in this auction. All non-competitive bids will be automatically awarded in full at the stop-out rate of the competitive auction. The minimum amount for a non-competitive bid is $10,000; the maximum amount is $5,000,000 and should be submitted in increments of $10,000. Non-Competitive bids must be submitted between 10:00 a.m. ET and 2:00 p.m. ET on the auction date.

Submission of Bids
Participants must submit bids by accessing the Term Deposit Facility application (https://www.federalreserve.org/arrow/ARROWWeb/home.do) between the opening time and the closing time on the auction date.

Notification
Summary auction results will be published on the Board of Governors' website (http://www.federalreserve.gov/monetarypolicy/tdf.htm) at approximately 12:00 p.m. (noon) ET on the notification date. Soon after, results will be posted on the Term Deposit Facility Resource Center page of the Central Bank Central website (http://www.frbservices.org/centralbank/term_deposit_facility.html). Participant awards will be posted to the Term Deposit Facility application at approximately 12:00 p.m. ET on the notification date, and participants will be able to view their awards by accessing the Term Deposit Facility application.

June 29, 2012
Banking Agencies Issue Host State Loan-to-Deposit Ratios

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency today issued the host state loan-to-deposit ratios that the banking agencies will use to determine compliance with section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. These ratios update data released on June 30, 2011.

In general, section 109 prohibits a bank from establishing or acquiring a branch or branches outside of its home state primarily for the purpose of deposit production. Section 109 also prohibits branches of banks controlled by out-of-state bank holding companies from operating primarily for the purpose of deposit production.

Section 109 provides a process to test compliance with the statutory requirements. The first step in the process involves a loan-to-deposit ratio screen that compares a bank's statewide loan-to-deposit ratio to the host state loan-to-deposit ratio for banks in a particular state.

A second step is conducted if a bank's statewide loan-to-deposit ratio is less than one-half of the published ratio for that state or if data are not available at the bank to conduct the first step. The second step requires the appropriate banking agency to determine whether the bank is reasonably helping to meet the credit needs of the communities served by the bank's interstate branches.

A bank that fails both steps is in violation of section 109 and is subject to sanctions by the appropriate banking agency.

The updated host state loan-to-deposit ratios are attached.

Attachment (22 KB PDF)

June 29, 2012
Federal Reserve Board and Federal Deposit Insurance Corporation Announce Process for Receiving and Evaluating Initial Resolution Plans, also Known as Living Wills

The Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board on Friday announced the process for receiving and evaluating the initial resolution plans—also known as living wills—from the largest banking organizations operating in the United States.

The Dodd-Frank Wall Street Reform and Consumer Protection Act requires that bank holding companies with total consolidated assets of $50 billion or more and nonbank financial companies designated by the Financial Stability Oversight Council for supervision by the Federal Reserve submit resolution plans annually to the FDIC and the Federal Reserve. Each plan must describe the company's strategy for rapid and orderly resolution under the Bankruptcy Code in the event of material financial distress or failure of the company. The FDIC and Federal Reserve must review each resolution plan and jointly may determine that a resolution plan is not credible or would not facilitate an orderly resolution of the company in bankruptcy.

Companies subject to the rule are required to file their initial resolution plans in three groups and on a staggered schedule. Firms in the first group, which includes U.S. bank holding companies with $250 billion or more in total nonbank assets and foreign-based bank holding companies with $250 billion or more in total U.S. nonbank assets, must submit their initial resolution plans on or before July 2, 2012.

By regulation, the plans must be divided into a public section and a confidential section. The public section of the plans will contain detailed information to allow the public to understand the business of the covered company. Information in the public portion will include details such as a description of the company's core business lines and financial information regarding assets, liabilities, capital, and major funding sources.

Following submission of a resolution plan, the FDIC and Federal Reserve will—

• Release the public section of the resolution plans by close of business on Tuesday, July 3, 2012;
• Preliminarily review the plan for informational completeness within 60 days; and
• Review each plan for its compliance with the requirements of the rule.

This first group of submissions will include Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and UBS.

June 29, 2012
Agencies Release List of Distressed or Underserved Nonmetropolitan Middle-Income Geographies

The federal bank and thrift regulatory agencies today announced the availability of the 2012 list of distressed or underserved nonmetropolitan middle-income geographies where revitalization or stabilization activities will receive Community Reinvestment Act (CRA) consideration as "community development."

"Distressed nonmetropolitan middle-income geographies" and "underserved nonmetropolitan middle-income geographies" are designated by the agencies in accordance with their CRA regulations. The criteria for designating these areas are available on the Federal Financial Institutions Examination Council (FFIEC) website (www.ffiec.gov/cra). The designations continue to reflect local economic conditions, including triggers such as unemployment, poverty, and population changes.

The U.S. Census Bureau revised some census tract boundaries as a result of the 2010 Census. The current list of distressed or underserved nonmetropolitan middle-income geographies does not reference the 2011 designation. Geographies on the 2012 list will not necessarily have a corresponding 2011 geography. Therefore, users of the data are encouraged to refer to the list published in 2011 and to use the one-year lag provision to determine if an activity is eligible for CRA consideration.

Several of the data sets associated with the criteria for designating the distressed or underserved geographies are no longer offered or were not available at the time of this press release. Comparable or existing data were substituted in the calculations.1 In addition, the 2010 Census summary files for American Samoa, Commonwealth of the Northern Mariana Islands, Guam, and U.S. Virgin Islands are not yet available. This initial release of the 2012 list does not contain any tract information for those areas. The 2012 list will be updated when information becomes available, which is expected in late 2012. The 2011 lists should be used for those areas until the updated lists are released.

As with past releases, the agencies incorporate a one-year lag period for geographies that are no longer designated as distressed or underserved in the current release. Geographies subject to this one-year lag period are eligible to receive consideration for community development activities for 12 months after publication of the current list.

The current and previous years' lists can be found on the FFIEC website, along with information about the data sources used to generate those lists.

1. These criteria are provided in Interagency Question and Answer § __.12(g)(4)(iii) – 1 (75 FR 11647-48 (Mar. 11, 2010). A technical revision conforming the Interagency Question and Answer to this announcement will be reflected in the next publication of the Interagency Question and Answers Regarding Community Reinvestment in the Federal Register. The Domestic 5-year net migration provided by Census 2000 (PHC-T-22) Table 2 is not available in the 2010 Census. Therefore, effective with the 2012 list, the following formula for 5-year loss in population will be used in its place: % 5 year population loss = (2010 population - 2005 population)/2005 population. The threshold for 5-year population loss is a loss of 5 percent or more. All data are from the County Intercensal Estimates (2000-2010) at http://www.census.gov/popest/data/intercensal/county/county2010.html. The U.S. Department of Agriculture has not yet released the new urban influence codes. Therefore the 2012 list will continue to use the 2003 codes at http://www.ers.usda.gov/Data/UrbanInfluenceCodes/ as the data source for Low Density. As was the case previously, the 2012 list will use the urban influence codes 7, 10, 11 or 12. Return to text

June 28, 2012
Federal Reserve Board and Treasury Department Agree to Reduce Credit Protection Treasury is Providing for the Term Asset-Backed Securities Loan Facility

The Federal Reserve Board on Thursday announced that it agreed with the Treasury Department that it was appropriate to reduce from $4.3 billion to $1.4 billion the credit protection Treasury is providing for the Term Asset-Backed Securities Loan Facility (TALF).

During the financial crisis, after asset-backed securities markets seized up, the Federal Reserve Bank of New York lent $71 billion under the TALF to investors in highly rated asset-backed securities (ABS) and commercial mortgage-backed securities (CMBS). By encouraging issuance of ABS and CMBS, the TALF supported the economy by increasing credit availability to American households and businesses. Most TALF loans have been repaid or matured. As of June 20, 2012, TALF loans outstanding totaled $5.3 billion.

TALF, which began operating in March 2009, was originally authorized to lend up to $200 billion, with the Treasury's Troubled Asset Relief Program (TARP) providing $20 billion in credit protection. When the program closed on June 30, 2010, $43 billion in loans, with initial maturities of three or five years, were outstanding and the Board agreed at that time to a reduction in TARP credit protection to $4.3 billion. Borrowers have continued to repay their loans early at a rapid pace, in part because interest rates on TALF loans were designed to be higher than market rates in more-normal conditions. Additionally, some three-year TALF loans have matured.

TALF supported the origination of nearly 3 million auto loans, more than 1 million student loans, nearly 900,000 loans to small businesses, 150,000 other business loans, and millions of credit card loans. To date, the program has experienced no losses and the Board continues to see it as highly unlikely that recourse to TARP funds will be necessary.

For media inquiries, call 202-452-2955.

June 21, 2012
Agencies Release Financial Remediation Guidance, Extend Deadline for Requesting a Free Independent Foreclosure Review to September 30, 2012

The Office of the Comptroller of the Currency and the Federal Reserve Board Thursday released guidance that will be used in determining the compensation or other remedy that borrowers will receive for financial injury identified during the Independent Foreclosure Review.

The agencies also announced the extension of the deadline for eligible borrowers to request a free review of their mortgage foreclosures under the Independent Foreclosure Review to September 30, 2012. The new deadline gives borrowers two additional months to submit a request for review.

The guidance helps ensure that similarly situated borrowers who suffered financial injury as a result of errors in foreclosure actions on their homes are treated similarly. Under the guidance, remediation for injuries may include lump-sum payments, suspension or rescission of a foreclosure, a loan modification or other loss mitigation assistance, correction of credit reports, or correction of deficiency amounts and records. Lump sum payments can range from $500 to, in the most egregious cases, $125,000 plus equity.

The guidance covers many examples, but does not cover all possible scenarios. Examples of some of the actions by a servicer that might have resulted in financial injury include:

• Foreclosing on a borrower in violation of the Servicemembers Civil Relief Act;
• Foreclosing on a borrower who was not in default on the mortgage;
• Failing to convert a qualified borrower to a permanent modification after successful completion of a written modified payment plan that was supposed to lead to permanent modification;
• Foreclosing on a borrower prior to expiration of a written modified payment plan that leads to permanent modification, while borrower was performing all requirements of the written plan;
• Denying a borrower's loan modification application that should have been approved;
• Failing to offer loan modification options as required by an applicable program;
• Giving a borrower a loan modification with a higher interest rate than should have been charged under the relevant loan modification program;
• Foreclosing on a borrower in violation of federal bankruptcy laws;
• Not providing a borrower with proper notification during the foreclosure process; and
• Committing errors that did not result in foreclosure, but resulted in other financial injury.

Requesting a review does not preclude borrowers from taking other actions related to their foreclosures. A servicer is not permitted to require a borrower to sign a waiver of the borrower's ability to pursue claims against the servicer in order to receive compensation under the Independent Foreclosure Review.

The announcements continue efforts to implement actions that the agencies required of servicers in enforcement actions issued in April 2011 to correct unsafe and unsound mortgage servicing and foreclosure practices. Those orders required servicers to retain independent consultants to review foreclosures that were in process in 2009 or 2010, and required servicers to remediate financial injury that is found.

More information, including how to apply online, about the Independent Foreclosure Review is available at http://www.independentforeclosurereview.com.

Financial Remediation Frequently Asked Questions (PDF)
Financial Remediation Framework (PDF)

Related Information

What You Need To Know: Independent Foreclosure Review
What can I do if I believe I was harmed by servicer error during the foreclosure process?

Video
Independent Foreclosure Review Video
Independent Foreclosure Review Spanish Video

June 21, 2012
Agencies Issue Guidance Concerning Mortgage Servicing Practices that Impact Servicemembers

The Federal Reserve Board on Thursday joined with four other financial regulatory agencies in issuing guidance concerning mortgage servicing practices that may pose risks to homeowners serving in the military.

Specifically, the guidance addresses risks related to military homeowners who have informed their loan servicer that they have received Permanent Change of Station (PCS) orders and who might seek assistance with their mortgage loans.

For military homeowners, receiving PCS orders to relocate to a new duty station can present challenges when they are unable to sell their homes to pay off the mortgage debt. The guidance reminds mortgage loan servicers that their employees should be adequately trained about the options available for assisting military homeowners with PCS orders. When homeowners notify their servicers that they have received PCS orders, servicers should provide accurate, clear, and readily understandable information about available options for which the homeowner may qualify based on the information known. Servicers also should communicate decisions on assistance requests in a timely manner.

The guidance, which is attached, is consistent with the Servicemembers Civil Relief Act and with guidance and examination procedures previously issued by the Federal Reserve regarding working with homeowners who are financially unable to continue meeting their mortgage payments.

Joining in the guidance are the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency.

Attachment (PDF)

For media inquiries, call 202-452-2955.

June 20, 2012
Federal Reserve Board and Federal Open Market Committee Release Economic Projections from the June 19-20 FOMC Meeting

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached table and charts summarizing the economic projections and the target federal funds rate projections made by Federal Reserve Board members and Federal Reserve Bank presidents for the June 19–20 meeting of the Committee.

The table will be incorporated into a summary of economic projections released with the minutes of the June 19–20 meeting. Summaries of economic projections are released on an approximately quarterly schedule.

Projections materials (PDF)

June 20, 2012
Federal Reserve Issues FOMC Statement

Information received since the Federal Open Market Committee met in April suggests that the economy has been expanding moderately this year. However, growth in employment has slowed in recent months, and the unemployment rate remains elevated. Business fixed investment has continued to advance. Household spending appears to be rising at a somewhat slower pace than earlier in the year. Despite some signs of improvement, the housing sector remains depressed. Inflation has declined, mainly reflecting lower prices of crude oil and gasoline, and longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects economic growth to remain moderate over coming quarters and then to pick up very gradually. Consequently, the Committee anticipates that the unemployment rate will decline only slowly toward levels that it judges to be consistent with its dual mandate. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee anticipates that inflation over the medium term will run at or below the rate that it judges most consistent with its dual mandate.

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

The Committee also decided to continue through the end of the year its program to extend the average maturity of its holdings of securities. Specifically, the Committee intends to purchase Treasury securities with remaining maturities of 6 years to 30 years at the current pace and to sell or redeem an equal amount of Treasury securities with remaining maturities of approximately 3 years or less. This continuation of the maturity extension program should put downward pressure on longer-term interest rates and help to make broader financial conditions more accommodative. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. The Committee is prepared to take further action as appropriate to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who opposed continuation of the maturity extension program.

Statement Regarding Continuation of the Maturity Extension Program

June 12, 2012
Agencies Seek Comment on Regulatory Capital Rules and Finalize Market Risk Rule

The Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (Board), and the Federal Deposit Insurance Corporation (FDIC) are seeking comment on three notices of proposed rulemaking (NPRs) that would revise and replace the agencies' current capital rules. The agencies also announced the finalization of the market risk capital rule that was proposed in 2011.

In the first Basel III NPR, Regulatory Capital Rules: Regulatory Capital, Implementation of Basel III, Minimum Regulatory Capital Ratios, Capital Adequacy, and Transition Provisions (Basel III NPR), the agencies are proposing to revise their risk-based and leverage capital requirements consistent with agreements reached by the Basel Committee on Banking Supervision (Basel III). The Basel III NPR would apply to all insured banks and savings associations, top-tier bank holding companies domiciled in the United States with more than $500 million in assets, and savings and loan holding companies that are domiciled in the United States. Provisions of this NPR that would apply to these banking organizations include implementation of a new common equity tier 1 minimum capital requirement, a higher minimum tier 1 capital requirement, and, for banking organizations subject to the advanced approaches capital rules, a supplementary leverage ratio that incorporates a broader set of exposures. Additionally, consistent with Basel III, the agencies propose to apply limits on a banking organization's capital distributions and certain discretionary bonus payments if the banking organization does not hold a specified "buffer" of common equity tier 1 capital in addition to the minimum risk-based capital requirements. The revisions set forth in this NPR are consistent with section 171 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which requires the agencies to establish minimum risk-based and leverage capital requirements.

The Basel III NPR also would revise the agencies' prompt corrective action framework by incorporating the new regulatory capital minimums and updating the definition of tangible common equity. Prompt corrective action is an enforcement framework that constrains the activities of insured depository institutions based on their level of regulatory capital.

The second Basel III NPR, "Regulatory Capital Rules: Advanced Approaches Risk-based Capital Rules; Market Risk Capital Rule" (Advanced Approaches and Market Risk NPR), would revise the advanced approaches risk-based capital rules consistent with Basel III and other changes to the Basel Committee's capital standards. The agencies also propose revising the advanced approaches risk-based capital rules to be consistent with section 939A and section 171 of the Dodd-Frank Act. Additionally in this NPR, the OCC and FDIC propose that the market risk capital rules apply to federal and state savings associations, and the Board proposes that the advanced approaches and market risk capital rules apply to top-tier savings and loan holding companies domiciled in the United States, if stated thresholds for trading activity are met. Generally, the advanced approaches rules would apply to such institutions with $250 billion or more in consolidated assets or $10 billion or more in foreign exposure, and the market risk rule would apply to savings and loan holding companies with significant trading activity.

In the third capital NPR, "Regulatory Capital Rules: Standardized Approach for Risk-weighted Assets; Market Discipline and Disclosure Requirements" (Standardized Approach NPR), the agencies propose to revise and harmonize rules for calculating risk-weighted assets to enhance risk sensitivity and address weaknesses identified over recent years, including by incorporating aspects of the Basel II standardized framework, and alternatives to credit ratings, consistent with section 939A of the Dodd-Frank Act. The revisions include methods for determining risk-weighted assets for residential mortgages, securitization exposures, and counterparty credit risk. The NPR also would introduce disclosure requirements that would apply to U.S. banking organizations with $50 billion or more in total assets. The Standardized Approach NPR would apply to the same set of institutions as the Basel III NPR.

The proposals are published in three separate NPRs to reflect the distinct objectives of each proposal, to allow interested parties to better understand the various aspects of the overall capital framework, including which aspects of the rules would apply to which banking organizations, and to help interested parties better focus their comments on areas of particular interest.

The final market risk rule amends the calculation of market risk to better characterize the risks facing a particular institution and to help ensure the adequacy of capital related to the institution's market risk-related positions. It applies to a banking organization with aggregate trading assets and liabilities equal to 10 percent of total assets, or $1 billion or more. The most significant change from the proposal relates to the methods for determining the capital requirements for securitization positions. Specifically, under the final rule the mechanism to calculate the capital charges on securitization exposures when the underlying pool of assets demonstrates credit weakness was altered to focus on delinquent exposures rather than on cumulative losses. This change has the effect of imposing greater capital requirements on the more subordinate tranches in a securitization. Under the proposal, when the underlying pool of assets demonstrates credit weakness, increased capital requirements would have applied to the entire range of outstanding securities, including the most senior tranches in a securitization. The final rule will be effective on January 1, 2013.

Comments on the three NPRs are requested by September 7, 2012.

Attachments

• Basel III NPR (PDF)
• Advanced Approaches and Market Risk NPR (PDF)
• Standardized Approach NPR (PDF)
• Final Rule Regarding Market Risk Capital (PDF)

June 07, 2012
Federal Reserve Board Invites Comment on Three Proposed Rules Intended to Help Ensure Banks Maintain Strong Capital Positions

The Federal Reserve Board on Thursday invited comment on three proposed rules intended to help ensure banks maintain strong capital positions, enabling them to continue lending to creditworthy households and businesses even after unforeseen losses and during severe economic downturns.

Taken together, the proposals would establish an integrated regulatory capital framework that addresses shortcomings in regulatory capital requirements that became apparent during the recent financial crisis. The proposed rule would implement in the United States the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision and changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

"Capital is important to banking organizations and the financial system because it acts as a financial cushion to absorb a firm's losses," Federal Reserve Chairman Ben Bernanke said. "With these proposed revisions, banking organizations' capital requirements should better reflect their risk profiles, improving the resilience of the U.S. banking system in times of stress, thus contributing to the overall health of the U.S. economy."

The rulemaking was divided into three proposed rules to minimize burden on smaller and mid-sized banking organizations and to allow firms to focus on the aspects of the proposed revisions that are most relevant to them. The Board is publishing all of the proposed changes to the current regulatory capital rules at the same time so that banking organizations and the general public can understand the overall impact of the proposals when drafting comments.

"While rigorous capital requirements are not a sufficient condition for a strong, resilient financial system, they are surely a necessary one," Gov. Daniel Tarullo said. The "rules before us this afternoon mark an important milestone on the road to a set of strong, complementary capital standards for banking organizations."

The first notice of proposed rulemaking (NPR), titled Regulatory Capital Rules: Regulatory Capital, Implementation of Basel III, Minimum Regulatory Capital Ratios, Capital Adequacy, and Transition Provisions, would apply to all depository institutions, bank holding companies with total consolidated assets of $500 million or more, and savings and loan holding companies (collectively, banking organizations). Consistent with the international Basel framework, this NPR would:

• increase the quantity and quality of capital required by proposing a new minimum common equity tier 1 ratio of 4.5 percent of risk-weighted assets and a common equity tier 1 capital conservation buffer of 2.5 percent of risk-weighted assets, and raising the minimum tier 1 capital ratio from 4 percent to 6 percent of risk-weighted assets;
• revise the definition of capital to improve the ability of regulatory capital instruments to absorb losses;
• establish limitations on capital distributions and certain discretionary bonus payments if additional specified amounts, or "buffers," of common equity tier 1 capital are not met; and
• introduce a supplementary leverage ratio for internationally active banking organizations.

The Basel III proposal would also revise the Board's prompt corrective action framework by incorporating the new regulatory capital minimums and updating the definition of tangible common equity. Prompt corrective action is an enforcement framework used by supervisors to constrain the activities of banking organizations based on the level of regulatory capital.

The second NPR, titled Regulatory Capital Rules: Standardized Approach for Risk-weighted Assets; Market Discipline and Disclosure Requirements, also would apply to all banking organizations. This NPR would revise and harmonize the Board's rules for calculating risk-weighted assets to enhance risk sensitivity and address weaknesses that have been identified over the past several years. Banks and regulators use risk weighting to assign different levels of risk to different classes of assets--riskier assets require higher capital cushions and less risky assets require smaller capital cushions.

Banking organizations that are not actively internationally or are not subject to the market risk rules would only need to review the first two NPRs.

The third NPR, titled Regulatory Capital Rules: Advanced Approaches Risk-based Capital Rule; Market Risk Capital Rule, would apply to banking organizations that are subject to the banking agencies' advanced approaches rule or to their market risk rule.¹ This NPR would enhance the risk sensitivity of the current rule for internationally active firms to better address counterparty credit risk and interconnectedness among financial institutions. It also would apply the advanced approaches rule and market risk capital rule to savings and loan holding companies that meet the relevant size, foreign exposure, or trading activity thresholds. As part of the restructuring of the capital rules into an integrated framework, this NPR incorporates the final market risk rule that was approved Thursday by the Board into the framework.

The Federal Reserve requests comments on the three NPRs by September 7, 2012.

Statement by Chairman Ben S. Bernanke
Statement by Governor Elizabeth A. Duke
Statement by Governor Daniel K. Tarullo

Federal Register Notices

• Regulatory Capital Rules: Regulatory Capital, Implementation of Basel III, Minimum Regulatory Capital Ratios, Capital Adequacy, and Transition Provisions (PDF)
• Regulatory Capital Rules: Standardized Approach for Risk-weighted Assets; Market Discipline and Disclosure Requirements (PDF)
• Regulatory Capital Rules: Advanced Approaches Risk-based Capital Rule; Market Risk Capital Rule (PDF)

Questions and Answers -- Proposed Rulemakings for an Integrated Regulatory Capital Framework (PDF)

Board Votes

For media inquiries, call 202-452-2955

1. Advanced approaches banking organizations generally are those with consolidated total assets of at least $250 billion or consolidated total on-balance sheet foreign exposures of at least $10 billion. Market risk banking organizations generally are those with aggregate trading assets and trading liabilities equal to at least 10 percent of quarter-end total assets or $1 billion.

June 07, 2012
Federal Reserve Board Approves Final Rule to Implement Changes to Market Risk Capital Rule

The Federal Reserve Board on Thursday approved a final rule to implement changes to the market risk capital rule, which requires banking organizations with significant trading activities to adjust their capital requirements to better account for the market risks of those activities.

The final rule implements certain revisions made by the Basel Committee on Banking Supervision to its market risk framework between 2005 and 2010. The final rule will better capture positions for which the market risk capital rule is appropriate, reduce procyclicality in market risk capital requirements, enhance sensitivity to risks that are not adequately captured by the current regulatory methodologies, and increase transparency through enhanced disclosures.

The final rule does not include those aspects of the Basel Committee's market risk framework that rely on credit ratings. Instead, the final rule includes alternative standards of creditworthiness for determining specific risk capital requirements for certain debt and securitization positions. These standards are consistent with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act, under which all federal agencies must remove from their regulations references to, and requirements of reliance on, credit ratings.

The final rule applies to bank holding companies and state-chartered banks that are members of the Federal Reserve System. Separately, on Thursday the Board proposed to apply the market risk capital rule to savings and loan holding companies that meet the thresholds described in the final rule.

The final rule is effective January 1, 2013.

Attachment (437 KB PDF)

For media inquiries, call 202-452-2955.

June 04, 2012
Federal Reserve Board Announces Upcoming Changes to Its Consumer Credit (G.19) Release

The Federal Reserve Board on Monday announced that it has restructured the G.19 statistical release, Consumer Credit, to reflect regulatory filing changes for U.S.-chartered depository institutions and, in addition to the data currently reported on level of credit outstanding, the release will now report data on the flow of credit. The revised data will be made available with the release of the April report on Thursday, June 7.

Savings institutions now file the same regulatory report as U.S.-chartered commercial banks. The U.S.-chartered commercial banks sector and the savings institution sector, which were previously shown separately, have been combined into a new sector called depository institutions. The previously published series for U.S.-chartered commercial banks and savings institutions will continue to be available as separate series in the Federal Reserve's Data Download Program (DDP).

The new flow data represent changes in the level of credit due to economic and financial activity, rather than breaks in the data series due to changes in methodology, source data, and other technical aspects of the estimation that affect the level of credit. Access to flow data allows users to calculate a growth rate for consumer credit that excludes such breaks.

These changes will be accompanied by revisions to the estimates of outstanding consumer credit back to January 2006 and reflect improvements in methodology and a comprehensive review of the source data.

The G.19 data can be found on the Board's website at: http://www.federalreserve.gov/releases/g19/current/

For media inquiries, call 202-452-2955.

June 04, 2012
Agencies Sign Memorandum of Understanding on Supervisory Coordination

Five federal supervisory agencies today released a Memorandum of Understanding (MOU) that clarifies how the agencies will coordinate their supervisory activities, consistent with the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act).

Section 1025 of the Dodd-Frank Act requires that the Consumer Financial Protection Bureau (CFPB) and the prudential regulators—the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency—coordinate important aspects of their supervision of insured depository institutions with more than $10 billion in assets and their affiliates. Such coordination includes scheduling examinations, conducting simultaneous examinations of covered depository institutions unless an institution requests separate examinations, and sharing draft reports of examination for comment.

The MOU is intended to establish arrangements for coordination and cooperation between the CFPB and the prudential regulators, minimize unnecessary regulatory burden, avoid unnecessary duplication of effort, and decrease the risk of conflicting supervisory directives.

Under the MOU, the agencies will coordinate examinations and other supervisory activities and share certain material supervisory information concerning:

• Compliance with federal consumer financial laws and certain other federal laws that regulate consumer financial products and services;
• Consumer compliance risk management programs;
• Activities such as underwriting, sales, marketing, servicing, collections, if they are related to consumer financial products or services; and
• Other related matters that the agencies may mutually agree upon.

These coordination undertakings should lead to greater uniformity and efficiencies in supervision and help to minimize regulatory burden on covered depository institutions.

Attachment (247 KB PDF)

May 30, 2012
Federal Reserve Board Announces Final Rule Outlining Procedures for Securities Holding Companies (SHCs) to Elect to Be Supervised by The Federal Reserve

The Federal Reserve Board on Wednesday announced the approval of a final rule outlining the procedures for securities holding companies (SHCs) to elect to be supervised by the Federal Reserve. An SHC is a nonbank company that owns at least one registered broker or dealer.

The Dodd-Frank Wall Street Reform and Consumer Protection Act eliminated the previous supervision framework that applied to SHCs under the Securities and Exchange Commission and permitted SHCs to be supervised by the Federal Reserve. An SHC may seek supervision by the Federal Reserve to meet requirements by a regulator in another country that the firm be subject to comprehensive, consolidated supervision in the United States in order to operate in the country.

The final rule specifies the information that an SHC will need to provide to the Board as part of registration for supervision, including information related to organizational structure, capital, and financial condition. Under the final rule, an SHC's registration becomes effective no later than 45 days from the date the Board receives all required information.

The final rule provides that upon an effective registration, an SHC would be supervised and regulated as if it were a bank holding company. However, consistent with the Dodd-Frank Act, the restrictions on nonbanking activities in the Bank Holding Company Act would not apply to a supervised SHC.

For media inquiries, call 202-452-2955.

Board Votes

Attachment (238 KB PDF)

May 30, 2012
Jeremy C. Stein Takes Oath of Office as a Member of the Board of Governors of the Federal Reserve System

Jeremy C. Stein on Wednesday took the oath of office as a member of the Board of Governors of the Federal Reserve System. The oath was administered by Chairman Ben S. Bernanke in the Board Room.

President Obama announced his intention to nominate Dr. Stein on December 27, 2011, and the Senate confirmed him on May 17, 2012. Dr. Stein was nominated to an unexpired term ending January 31, 2018, which was vacated by the resignation of Kevin M. Warsh on April 2, 2011.

A biography of Dr. Stein is available on the Board's website: www.federalreserve.gov/bios/.

For media inquiries, call 202-452-2955.

May 24, 2012
Federal Reserve Board Releases Action Plans and Engagement Letter to Correct Deficiencies in Residential Mortgage Loan Servicing and Foreclosure Processing

The Federal Reserve Board on Thursday released action plans for Citigroup and HSBC Finance Corporation to correct deficiencies in residential mortgage loan servicing and foreclosure processing. It also released the engagement letter between Ally Financial Inc. and the independent consultant retained by Ally to review foreclosures that were in process in 2009 and 2010.

In addition, the Federal Reserve released a supplemental agreement with Ally to address the institution's foreclosure review obligations following the recent action by Ally's mortgage servicing subsidiaries to seek protection under the U.S. Bankruptcy Code.

The action plans are required by formal enforcement actions issued by the Federal Reserve last year. The enforcement actions require the mortgage loan servicers regulated by the Federal Reserve and the parent holding companies of mortgage servicers to submit acceptable plans to improve their procedures and controls as well as oversight of foreclosure activities.

The enforcement actions further require the mortgage servicing subsidiaries to provide appropriate remediation to borrowers who suffered financial injury as a result of errors by the servicers. The engagement letter describes the procedures that will be followed by the independent consultant in reviewing Ally's foreclosure files to determine whether borrowers suffered financial injury as a result of servicer error.

Release of the action plans and engagement letter follows reviews conducted from November 2010 to January 2011, in which examiners found unsafe and unsound processes and practices in residential mortgage loan servicing and foreclosure processing at a number of supervised institutions.

The documents disclosed Thursday are the last to be released of those required by the formal enforcement actions issued in April 2011 against servicers regulated by the Federal Reserve and parent holding companies of mortgage loan servicers. The Federal Reserve entered into consent enforcement actions with Goldman Sachs Group, Inc., in September 2011 and Morgan Stanley in April 2012 to address deficient servicing and foreclosure practices at their residential mortgage loan servicing subsidiaries. The engagement letters and action plans required under these enforcement actions are not yet finalized and will be released after approval.

The Federal Reserve will closely follow the implementation of action plans to ensure that the financial institutions correct deficiencies and evaluate any harm that was done to homeowners in the foreclosure process in 2009 and 2010.

Ally Engagement Letter (PDF)
Ally Supplemental Agreement (PDF)
Citigroup--Section 5--Amended Supplement (PDF)
Citigroup--Section 5--Internal Audit Plan (PDF)
HSBC--Section 5--Single Point of Contact (PDF)

For media inquiries, call 202-452-2955

May 23, 2012
Federal Reserve Board Announces New Video Explaining How Borrowers Can Apply for a Free, Independent Foreclosure File Review

The Federal Reserve Board on Wednesday announced the availability of a new video that explains how borrowers who believe they were financially harmed during the mortgage foreclosure process in 2009 and 2010 can apply for a free, independent foreclosure file review.

Both English and Spanish versions of the video are available for viewing on the Federal Reserve Board's website (http://www.federalreserve.gov/mediacenter/media.htm) and on You Tube at (http://www.youtube.com/FedReserveBoard).

The brief announcement reminds borrowers that, as part of the enforcement actions taken in April 2011 by federal banking regulatory agencies, they may be eligible to receive compensation if the independent review finds evidence of direct financial injury due to servicer error. Borrowers are eligible for a review if their primary residence was in the foreclosure process in 2009 or 2010 and their mortgage loan servicer is participating in the Independent Foreclosure Review. The list of participating servicers can be found at: http://www.IndependentForeclosureReview.com or at http://www.federalreserve.gov/consumerinfo/independent-foreclosure-review.htm

The deadline to request a foreclosure review is July 31, 2012. For more information, borrowers may call 888-952-9105 or visit http://www.IndependentForeclosureReview.com.

For media inquiries, call 202-452-2955.

May 16, 2012
FOMC Announces Revised Tentative 2012 Meeting Schedule and Tentative 2013 Meeting Schedule

The Federal Open Market Committee (FOMC) on Wednesday announced a revised tentative meeting schedule for 2012 and a tentative meeting schedule for 2013. In order to provide ample time for the Committee's usual discussions, these meetings have been scheduled to take place over two days. In addition, the FOMC announced that, going forward, the presentation of the Summary of Economic Projections and the Chairman's press conference will occur in conjunction with the meetings scheduled for the third month of each quarter (March, June, September, and December).

Revised tentative meeting schedule for 2012:

June 19-20 (Tuesday-Wednesday)*

July 31-August 1 (Tuesday-Wednesday)

September 12-13 (Wednesday-Thursday)*

October 23-24 (Tuesday-Wednesday)

December 11-12 (Tuesday-Wednesday)*

Tentative meeting schedule for 2013:

January 29-30 (Tuesday-Wednesday)

March 19-20 (Tuesday-Wednesday)*

April 30-May 1 (Tuesday-Wednesday)

June 18-19 (Tuesday-Wednesday)*

July 30-31 (Tuesday-Wednesday)

September 17-18 (Tuesday-Wednesday)*

October 29-30 (Tuesday-Wednesday)

December 17-18 (Tuesday-Wednesday)*

January 28-29, 2014 (Tuesday-Wednesday)

* Meeting associated with a Summary of Economic Projections and a press conference by the Chairman.

For media inquiries, call 202-452-2955.

May 16, 2012
Minutes of the Federal Open Market Committee, April 24–25, 2012

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on April 24–25, 2012. A summary of economic projections made by Federal Reserve Board members and Reserve Bank presidents for the April 24–25, 2012 meeting is also included as an addendum to these minutes.

The minutes for each regularly scheduled meeting of the Committee ordinarily are made available three weeks after the day of the policy decision and subsequently are published in the Board's Annual Report. Summaries of economic projections are released on an approximately quarterly schedule. The descriptions of economic and financial conditions contained in these minutes and in the Summary of Economic Projections are based solely on the information that was available to the Committee at the time of the meeting.

The FOMC minutes can be viewed on the Board's website at http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm

Minutes of Federal Open Market Committee
April 24–25, 2012: PDF | HTML

May 14, 2012
Federal Reserve Announces Results of Auction of $3 Billion in 28-Day Term Deposits Held on May 14, 2012

On May 14, 2012, the Federal Reserve conducted an auction of $3 billion in 28-day term deposits through its Term Deposit Facility. Following are the results of the auction:

Bids at the stop-out rate were pro-rated at 31.92 percent. Resulting awards were rounded to the nearest $10,000 except that all awards below $10,000 were rounded up to $10,000.

The awarded deposits will settle on May 17, 2012, and will mature on June 14, 2012. The stop-out rate shown above will apply to all awarded deposits.

May 14, 2012
Agencies Clarify Supervisory Expectations for Stress Testing by Community Banks

Three federal banking agencies Monday issued a joint statement to clarify expectations for stress testing by community banks--banks, savings associations, and bank and savings and loan holding companies with $10 billion or less in total assets. The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of Currency clarified that community banks are not required or expected to conduct the types of stress testing required of larger organizations.

Attachment (27 KB PDF)

May 14, 2012
Agencies Finalize Large Bank Stress Testing Guidance

The Federal Reserve Board, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation on Monday issued final supervisory guidance regarding stress-testing practices at banking organizations with total consolidated assets of more than $10 billion.

The guidance highlights the importance of stress testing at banking organizations as an ongoing risk management practice that supports a banking organization's forward-looking assessment of its risks and better equips it to address a range of adverse outcomes. The recent financial crisis underscored the need for banking organizations to incorporate stress testing into their risk management practices, demonstrating that banking organizations unprepared for particularly adverse events and circumstances can suffer acute threats to their financial condition and viability.

This guidance builds upon previously issued supervisory guidance that discusses the uses and merits of stress testing in specific areas of risk management. The guidance outlines general principles for a satisfactory stress testing framework and describes various stress testing approaches and how stress testing should be used at various levels within an organization. The guidance also discusses the importance of stress testing in capital and liquidity planning and the importance of strong internal governance and controls as part of an effective stress-testing framework.

The guidance does not implement the stress testing requirements in the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) or in the Federal Reserve Board's capital plan rule that apply to certain companies, as those requirements have been or are being implemented through separate proposals by the respective agencies. However, the agencies expect that banking organizations with total consolidated assets of more than $10 billion would follow the principles set forth in the guidance--as well as other relevant supervisory guidance--when conducting stress testing in accordance with the Dodd-Frank Act, the capital plan rule, and other statutory or regulatory requirements.

May 09, 2012
Federal Reserve Offers $3 Billion in 28-Day Term Deposits Through its Term Deposit Facility

On Monday, May 14, 2012, the Federal Reserve will offer $3 billion in 28-day term deposits through its Term Deposit Facility. As noted in the Federal Reserve Board's September 8, 2010 release, this offering is part of ongoing small-value operations designed to provide eligible institutions with an opportunity to become familiar with term deposit operations. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation D, and the terms and conditions of the Term Deposit Facility (http://www.frbservices.org/centralbank/term_deposit_facility.html).

Description of Offering and Competitive Auction Parameters

Competitive bids submitted at the stop-out rate will be pro-rated and will be rounded to multiples of $10,000. Normal rounding convention will be used, except that awards under $10,000 will be rounded to $10,000.

Non-Competitive bids are allowed in this auction. All non-competitive bids will be automatically awarded in full at the stop-out rate of the competitive auction. The minimum amount for a non-competitive bid is $10,000; the maximum amount is $5,000,000 and should be submitted in increments of $10,000. Non-Competitive bids must be submitted between 10:00 a.m. ET and 2:00 p.m. ET on the auction date.

Submission of Bids
Participants must submit bids by accessing the Term Deposit Facility application (https://www.federalreserve.org/arrow/ARROWWeb/home.do) between the opening time and the closing time on the auction date.

Notification
Summary auction results will be published on the Board of Governors' website (http://www.federalreserve.gov/monetarypolicy/tdf.htm) at approximately 12:00 p.m. (noon) ET on the notification date. Soon after, results will be posted on the Term Deposit Facility Resource Center page of the Central Bank Central website (http://www.frbservices.org/centralbank/term_deposit_facility.html). Participant awards will be posted to the Term Deposit Facility application at approximately 12:00 p.m. ET on the notification date, and participants will be able to view their awards by accessing the Term Deposit Facility application.

May 01, 2012
Federal Reserve Board Publishes Comparative Information on Average Debit Card Interchange Fees

The Federal Reserve Board on Tuesday published comparative information on the average debit card interchange fees that each payment card network charges acquirers (and indirectly merchants) and provides to debit card issuers.

The Board's Regulation II provides that an issuer subject to the interchange fee standard (a non-exempt issuer) may not receive an interchange fee that exceeds 21 cents plus 0.05 percent multiplied by the value of the transaction, plus a 1-cent fraud-prevention adjustment, if eligible. The regulation does not apply to certain government-administered debit cards, certain other prepaid cards, or debit card issuers with consolidated assets of less than $10 billion. The interchange fee standard became effective on October 1, 2011.

As part of the rulemaking process, the Board collected 2009 data from payment card networks. The aggregate data provided by the networks indicated that the average interchange fee for all issuers was 43 cents. Data collected after the rule took effect show that the average interchange fee per transaction received by non-exempt issuers in the fourth quarter of 2011 declined substantially to 24 cents while the average interchange fee received by exempt issuers was 43 cents.

The large disparity that existed in 2009 between fees charged on debit card transactions requiring a signature and fees charged on transactions requiring a personal identification number (PIN) narrowed substantially, especially for non-exempt issuers.

The Board plans to collect and publish this fee information annually. The information may be useful to issuers (both exempt and non-exempt) and merchants in choosing payment card networks in which to participate and to policymakers in assessing the effect of Regulation II on the level of interchange fees received by exempt and nonexempt issuers over time.

The Board's findings and a table that contains comparative information on the average debit card interchange fees each payment card network provides to issuers are attached.

For media inquiries, call 202-452-2955.

Average Debit Card Interchange Fee by Payment Card Network (PDF)

Average Debit Card Interchange Fee by Payment Card Network (Excel)

April 26, 2012
Federal Reserve to Host Conference on Ways to Encourage Economic Growth in Native American Communities

The Federal Reserve Board, along with the Federal Reserve Bank of Minneapolis and the Federal Reserve Bank of San Francisco, will sponsor a nationwide conference next week to explore ways to encourage economic growth in Native American communities.

"Growing Economies in Indian Country: A National Summit," will be held May 1 in Washington, D.C. The summit is an outgrowth of a series of forums organized in partnership with the Interagency Working Group for Indian Affairs' Committee on Economic Development, a group of federal agency representatives who work with tribal governments.

Even as the national economy shows signs of improvement, communities in rural areas of the United States--particularly on tribal lands--still face considerable obstacles in attracting investment, accessing financial services, and supporting entrepreneurship. The summit will provide a venue for tribal leaders, policymakers, financial industry professionals, and community development service providers to discuss:

• challenges to economic development in Indian country
• opportunities to strengthen Tribal enterprise development
• opportunities to expand Native American entrepreneurship and access to small business capital
• opportunities to strengthen governance and legal structures

For more information, visit the conference website at: www.federalreserve.gov/newsevents/conferences/growing-economies-indian-country.htm. Live online video will be available at 9:15 a.m. EDT on May 1 at: www.ustream.tv/federalreserve.

For media inquiries, call 202-452-2955.

April 25, 2012
Federal Reserve Board and Federal Open Market Committee Release Economic Projections from the April 24-25 FOMC Meeting

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached table and charts summarizing the economic projections and the target federal funds rate projections made by Federal Reserve Board members and Federal Reserve Bank presidents for the April 24–25 meeting of the Committee.

The table will be incorporated into a summary of economic projections released with the minutes of the April 24–25 meeting. Summaries of economic projections are released on an approximately quarterly schedule.

Projections materials (PDF)

April 25, 2012
Federal Reserve Issues FOMC Statement

Information received since the Federal Open Market Committee met in March suggests that the economy has been expanding moderately. Labor market conditions have improved in recent months; the unemployment rate has declined but remains elevated. Household spending and business fixed investment have continued to advance. Despite some signs of improvement, the housing sector remains depressed. Inflation has picked up somewhat, mainly reflecting higher prices of crude oil and gasoline. However, longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects economic growth to remain moderate over coming quarters and then to pick up gradually. Consequently, the Committee anticipates that the unemployment rate will decline gradually toward levels that it judges to be consistent with its dual mandate. Strains in global financial markets continue to pose significant downside risks to the economic outlook. The increase in oil and gasoline prices earlier this year is expected to affect inflation only temporarily, and the Committee anticipates that subsequently inflation will run at or below the rate that it judges most consistent with its dual mandate.

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

The Committee also decided to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Sarah Bloom Raskin; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who does not anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate through late 2014.

April 20, 2012
Federal Reserve Board Announces the Formation of the Model Validation Council

The Federal Reserve Board on Friday announced the formation of the Model Validation Council, which will provide the Federal Reserve with expert and independent advice on its process to rigorously assess the models used in stress tests of banking institutions. In addition, the Federal Reserve announced it will host a two-day symposium to discuss best practices in stress testing.

The Dodd-Frank Wall Street Reform and Consumer Protection Act required the Federal Reserve to conduct annual stress tests of large bank holding companies and systemically important, nonbank financial institutions supervised by the Board. The Model Validation Council will provide input on the Board's efforts to assess the effectiveness of the models used in the stress tests. The council is intended to improve the quality of the Federal Reserve's model assessment program and to strengthen the confidence in the integrity and independence of the program.

The 2012 Model Validation Council members are:

• Francis X. Diebold, economics professor in the Department of Economics at the University of Pennsylvania (chair)
• Peter Christoffersen, professor at the Rotman School of Management at the University of Toronto
• Mark Flannery, professor at the Warrington College of Business Administration at the University of Florida
• Philippe Jorion, professor at the Paul Merage School of Business at the University of California at Irvine
• Chester Spatt, professor at the Tepper School of Business at Carnegie Mellon University
• Allan Timmermann, professor at the Rady School of Management at the University of California at San Diego

Formation of the council is one part of the Federal Reserve's efforts to tap outside expertise in the stress testing process. In another step, the Federal Reserve will host a symposium on stress testing models on September 13 and 14 at the Federal Reserve Bank of Boston. Discussions will focus on the design and implementation of stress testing models, and cover topics including the relative merits of different modeling frameworks, best industry practices, and key challenges. Participants will include experts from academia, industry, and the Federal Reserve.

Also on Friday, the Federal Reserve released Frequently Asked Questions (FAQs) and responses regarding models used in the stress tests in the recently completed Comprehensive Capital Analysis and Review based on industry outreach calls held last month. The FAQs cover a wide range of topics including methodologies to project losses for mortgages and other consumer portfolios, mortgage repurchase risk, and wholesale portfolios.

For media inquiries, call 202-452-2955

Frequently Asked Questions: Supervisory Methodologies in CCAR 2012 (463 KB PDF)

April 19, 2012
Agencies Clarify Volcker Rule Conformance Period

The Federal Reserve Board on Thursday announced its approval of a statement clarifying that an entity covered by section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the so-called Volcker Rule, has the full two-year period provided by the statute to fully conform its activities and investments, unless the Board extends the conformance period. Section 619 generally requires banking entities to conform their activities and investments to the prohibitions and restrictions included in the statute on proprietary trading activities and on hedge fund and private equity fund activities and investments.

Section 619 required the Board to adopt rules governing the conformance periods for activities and investments restricted by that section, which the Board did on February 9, 2011. Subsequently, the Board received a number of requests for clarification of the manner in which this conformance period would apply and how the prohibitions will be enforced. The Board is issuing this statement to address this question.

The Board's conformance rule provides entities covered by section 619 of the Dodd-Frank Act a period of two years after the statutory effective date, which would be until July 21, 2014, to fully conform their activities and investments to the requirements of section 619 of the Dodd-Frank Act and any implementing rules adopted in final under that section, unless that period is extended by the Board.

The Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, and the Commodity Futures Trading Commission (the agencies) plan to administer their oversight of banking entities under their respective jurisdictions in accordance with the Board's conformance rule and the attached statement. The agencies have invited public comment on a proposal to implement the Volcker rule, but have not adopted a final rule.

The statement is included in the attached Federal Register notice, publication of which is expected shortly.

Attachment (19 KB PDF)

April 16, 2012
U.S. Regulators Encourage Comments on CPSS-IOSCO Consultative Reports on Principles for Financial Market Infrastructures

The Committee on Payment and Settlement Systems (CPSS) and the Technical Committee of the International Organization of Securities Commissions (IOSCO) today published the final report on the Principles for Financial Market Infrastructures. The report updates, harmonizes, and strengthens the risk management and related standards applicable to financial market infrastructures (FMIs), including systemically important payment systems, central securities depositories, securities settlement systems, central counterparties, and trade repositories. CPSS and IOSCO also released for comment the Disclosure Framework for Financial Market Infrastructures (Disclosure Framework) and the Assessment Methodology for the Principles for FMIs and the Responsibilities of Authorities (Assessment Methodology).

The final report replaces the standards previously published by CPSS and CPSS-IOSCO in the Core Principles for Systemically Important Payment Systems, Recommendations for Securities Settlement Systems, and Recommendations for Central Counterparties. CPSS and IOSCO expect the principles in the final report to play an important role in the regulation of FMIs around the world. The report supports the initiatives of the Group of Twenty Finance Ministers and Central Bank Governors (G-20) and the Financial Stability Board to strengthen core financial infrastructures and markets.

CPSS and IOSCO released for comment the Disclosure Framework and the Assessment Methodology. The Board of Governors of the Federal Reserve System, as a member of CPSS, and the Commodity Futures Trading Commission and the Securities and Exchange Commission, as members of IOSCO, encourage interested persons to review and comment on the consultative documents. The deadline for submitting comments on both documents to CPSS and IOSCO is June 15, 2012.

The Disclosure Framework outlines basic information that FMIs should disclose to increase transparency of their governance, risk management, and operations in order to inform participants, authorities, and the public and to facilitate comparisons across FMIs. Under Principle 23 of the Principles for Financial Market Infrastructures, FMIs would be required to complete the Disclosure Framework and disclose their answers publicly on a regular basis.

The Assessment Methodology provides guidance for assessing and monitoring observance of the principles. It is primarily intended for external assessors at the international level. It also provides a baseline for national authorities to assess FMIs under their oversight or supervision.

The final report on the Principles for Financial Market Infrastructures, the consultative document for the Disclosure Framework, and the consultative document for the Assessment Methodology are available at http://www.bis.org/publ/cpss101.htm and http://www.iosco.org/library/pubdocs/pdf/IOSCOPD377.pdf (PDF). The CPSS-IOSCO press release on the publication of these documents is available at http://www.bis.org/press/p120416.htm and http://www.iosco.org/news/pdf/IOSCONEWS230.pdf (PDF). Comments on the consultative documents should be sent via e-mail to cpss@bis.org and to fmi@iosco.org.

April 05, 2012
Federal Reserve Board Issues Policy Statement Regarding Rental of Residential Properties Acquired in Foreclosure

The Federal Reserve Board on Thursday released a policy statement reiterating that statutes and Federal Reserve regulations permit rental of residential properties acquired in foreclosure as part of an orderly disposition strategy. The statement also outlines supervisory expectations for residential rental activities.

The general policy of the Federal Reserve is that banking organizations should make good faith efforts to dispose of foreclosed properties (also known as "other real estate owned" or "OREO"), including single-family homes, at the earliest practicable date. In this context, and in light of the extraordinary market conditions that currently prevail, the policy statement explains that banking organizations may rent residential OREO properties within legal holding-period limits without demonstrating continuous active marketing of the property for sale, provided that suitable policies and procedures are followed.

Moreover, to the extent that OREO rental properties meet the definition of community development under the Community Reinvestment Act (CRA) regulations, the banking organizations would receive favorable CRA consideration. In all respects, banking organizations that rent OREO properties are expected to comply with all applicable federal, state, and local statutes and regulations, some of which the policy statement highlights. The policy statement, in providing guidance to banking organizations and examiners, also describes specific supervisory expectations for banking organizations with a larger number of rental OREO properties, generally more than 50 properties available for rent or rented.

The policy statement applies to banking organizations for which the Federal Reserve is the primary federal supervisor, including state member banks, bank holding companies, non-bank subsidiaries of bank holding companies, savings and loan holding companies, non-thrift subsidiaries of savings and loan holding companies, and U.S. branches and agencies of foreign banking organizations.

For media inquiries, call 202-452-2955

Attachment (38 KB PDF)

April 05, 2012
Federal Reserve Approves Final Rule to Simplify Administration of Reserve Requirements and Reduce Costs for Depository Institutions and Federal Reserve Banks

The Federal Reserve Board on Thursday announced the approval of a final rule to simplify the administration of reserve requirements and reduce administrative and operational costs for depository institutions and Federal Reserve Banks. The rule does not affect the stance of monetary policy.

The rule, which amends Regulation D (Reserve Requirements of Depository Institutions), simplifies reserves administration by

• creating a common two-week maintenance period
• creating a penalty-free band around reserve balance requirements in place of using carryover and routine penalty waivers
• discontinuing as-of adjustments related to deposit report revisions and replacing all other as-of adjustments with direct compensation
• eliminating the contractual clearing balance program

The amendments to Regulation D will be implemented in two phases. The amendments related to the elimination of contractual clearing balances and as-of adjustments, and those related to the provision of direct compensation, will take effect on July 12, 2012. The amendments on the creation of a common two-week maintenance period and replacement of carryover and routine waivers with a penalty-free band around reserve balance requirements will take effect on January 24, 2013. The Board will provide the public with notice no later than November 1, 2012, if the January 24, 2013, date will be delayed.

The Board also approved a final rule amending Regulation J (Collection of Checks and Other Items by Federal Reserve Banks and Funds Transfers through Fedwire) to eliminate references to "as-of adjustments," consistent with the final amendments to Regulation D, and to make clarifications about the handling of checks sent to the Federal Reserve Banks and the application of Regulation J's funds transfer rules to remittance transfers. The final amendments to Regulation J will take effect on July 12, 2012, concurrent with the implementation of the corresponding amendments to Regulation D on the elimination of as-of adjustments.

The Board is also announcing two modifications to its overnight overdraft policy that will take effect on July 12, 2012. These modifications are (1) a change in the reference rate for computing charges for overnight overdrafts from the effective federal funds rate to the primary credit rate and (2) a multiday charge on overnight overdrafts incurred immediately before a weekend or holiday.

The Board's notices for the final rules amending Regulation D and Regulation J are attached and will be published shortly in the Federal Register.

For media inquiries, call 202-452-2955.

Federal Register Notice -- Regulation D, Final Rule (88 KB PDF)

Federal Register Notice -- Regulation J, Final Rule (123 KB PDF)

April 03, 2012
Minutes of the Federal Open Market Committee, March 13, 2012

The Federal Reserve Board and the Federal Open Market Committee on Tuesday released the attached minutes of the Committee meeting held on March 13, 2012.

The minutes for each regularly scheduled meeting of the Committee ordinarily are made available three weeks after the day of the policy decision and subsequently are published in the Board's Annual Report. The descriptions of economic and financial conditions contained in these minutes are based solely on the information that was available to the Committee at the time of the meeting.

The FOMC minutes can be viewed on the Board's website at http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm.

Minutes of Federal Open Market Committee
March 13, 2012: PDF | HTML

April 02, 2012
Federal Reserve Seeks Comment on Proposed Rulemaking to Establish Requirements for Determining Whether a Company is Predominantly Engaged in Financial Activities

The Federal Reserve Board on Monday requested comment on a proposed amendment to the Board's Notice of Proposed Rulemaking (NPR) issued February 11, 2011, to establish requirements for determining whether a company is "predominantly engaged in financial activities."

Under Title 1 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, a company generally can be designated for Board supervision by the Financial Stability Oversight Council only if 85 percent or more of the company's revenues or assets are related to activities that are financial in nature under the Bank Holding Company Act.

Some commenters to the February 2011 NPR asked whether conditions imposed on the conduct of financial activities by the Bank Holding Company Act and the Board's regulations should be considered in defining financial activities for purposes of Title I. The Board is therefore proposing to amend the NPR to clarify the activities that are financial for purposes of Title I.

Comments on the proposed amendment must be submitted by May 25, 2012.

For media inquiries, contact 202-452-2955

Attachment (102 KB PDF)

Board Voting Record

March 30, 2012
Agencies clarify effective date for Section 716 of the Dodd-Frank Act

Three federal financial regulatory agencies on Friday issued guidance clarifying that the effective date of section 716, the so-called Swaps Pushout provision, of the Dodd-Frank Wall Street Reform and Consumer Protection Act is July 16, 2013. The guidance is being issued by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency after receiving inquiries seeking clarification about the effective date. Section 716 prohibits certain types of Federal assistance, such as discount window lending and deposit insurance, for certain uses to a swaps entity, subject to specified exceptions, with respect to its swap, security-based swap, or other activity.

Attachment (66 KB PDF)

March 26, 2012
Agencies Propose Revisions to Leveraged Finance Guidance

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency (the agencies) are seeking comment on proposed revisions to the interagency leveraged finance guidance issued in 2001. Transactions that are covered by this guidance are characterized by a borrower with a degree of financial or cash flow leverage that significantly exceeds industry norms as measured by various debt, cash flow, or other ratios.

The agencies observed tremendous growth in the volume of leveraged credit leading up to the crisis and in the participation of non-regulated investors. While there was a pull-back in leveraged lending during the crisis, volumes have since increased while prudent underwriting practices have deteriorated. As the market has grown, debt agreements have frequently included features that provide relatively limited lender protection, including the absence of meaningful maintenance covenants and the inclusion of other features that can affect lenders' recourse in the event of weakened borrower performance. In addition, capital structures and repayment prospects for some transactions, whether originated to hold or to distribute, have been aggressive. Management information systems (MIS) at some institutions have proven less than satisfactory in accurately aggregating exposures on a timely basis, and many institutions have found themselves holding large pipelines of higher-risk commitments at a time when buyer demand for risky assets diminished significantly.

Leveraged finance is an important type of financing for the economy, and banks play an integral role in making credit available and syndicating that credit to investors. It is important that banks help provide financing to creditworthy borrowers in a safe and sound manner.

In light of the market's evolution, the agencies propose replacing the 2001 guidance with revised leveraged finance guidance that refocuses attention to five key areas:

• Establishing a Sound Risk-Management Framework: The agencies expect that management and the board identify the institution's risk appetite for leveraged finance, establish appropriate credit limits, and ensure prudent oversight and approval processes.
• Underwriting Standards: These outline the agencies' expectations for cash flow capacity, amortization, covenant protection, and collateral controls and emphasize that the business premise for each transaction should be sound and its capital structure should be sustainable irrespective of whether underwritten to hold or to distribute.
• Valuation Standards: These concentrate on the importance of sound methodologies in the determination and periodic revalidation of enterprise value.
• Pipeline Management: This highlights the need to accurately measure exposure on a timely basis, the importance of having policies and procedures that address failed transactions and general market disruption, and the need to periodically stress test the pipeline.
• Reporting and Analytics: This emphasizes the need for MIS that accurately capture key obligor characteristics and aggregates them across business lines and legal entities on a timely basis. Reporting and analytics also reinforce the need for periodic portfolio stress testing.

Although some sections of the guidance should apply to all leveraged transactions (for example, underwriting), the vast majority of community banks should not be affected as they have no exposure to leveraged loans.

Comments on the proposed guidance must be submitted to the agencies no later than June 8, 2012.

Attachment (79 KB PDF)

March 20, 2012
Federal Reserve Announces Results of Auction of $3 Billion in 28-Day Term Deposits Held on March 19, 2012

On March 19, 2012, the Federal Reserve conducted an auction of $3 billion in 28-day term deposits through its Term Deposit Facility. Following are the results of the auction:

Bids at the stop-out rate were pro-rated at 90.14 percent. Resulting awards were rounded to the nearest $10,000 except that all awards below $10,000 were rounded up to $10,000.

The awarded deposits will settle on March 22, 2012, and will mature on April 19, 2012. The stop-out rate shown above will apply to all awarded deposits.

March 20, 2012
Federal Reserve System Publishes Annual Financial Statements

The Federal Reserve System on Tuesday released the 2011 combined annual comparative financial statements for the Federal Reserve Banks, as well as for the 12 individual Federal Reserve Banks, the limited liability companies (LLCs) that were created to respond to strains in financial markets, and the Board of Governors. These financial statements are audited annually by an independent auditing firm.

The Federal Reserve Banks' 2011 net income of $77.4 billion was derived primarily from $83.6 billion in interest income on securities acquired through open market operations (Treasury securities, federal agency and government-sponsored enterprise (GSE) mortgage-backed securities (MBS), and GSE debt securities).

The Reserve Banks provided for payments of $75.4 billion of their 2011 net income to the U.S. Treasury.

Total Reserve Bank assets as of December 31, 2011, were $2.919 trillion, which represents an increase of $491 billion from the previous year. Holdings of U.S. Treasury securities increased by $683 billion, GSE debt securities holdings decreased by $45 billion, and federal agency and GSE MBS holdings decreased by $156 billion. The balances held under central bank liquidity swap arrangements increased by $99.7 billion.

Federal Reserve Bank assets related to credit and liquidity programs decreased by $95.8 billion. The closing of the American International Group, Inc. (AIG) recapitalization plan in January 2011 resulted in asset reductions of $47 billion, inclusive of the full repayment of the revolving line of credit with AIG in the amount of $20.6 billion and the redemption or sale of the Federal Reserve Bank of New York's (FRBNY) preferred interests in two AIG-related LLCs in the amount of $26.4 billion.

Investments held by the LLCs consolidated by the FRBNY decreased by $33 billion, primarily as a result of asset sales and maturities, and these proceeds were used to repay $32.3 billion of the loans extended by the FRBNY to the LLCs. In addition, loans outstanding under the Term Asset-Backed Securities Lending Facility decreased by $15.8 billion, as a result of principal payments and loan prepayments.

The combined annual financial statements for the Federal Reserve Banks and the consolidated annual financial statements for the Federal Reserve Bank of New York include information about the assets and income of each of the consolidated LLCs, such as overall financial results, portfolio composition, asset quality, and asset value information. The statements also contain summaries of the associated credit and market risks for each significant holding.

The Federal Reserve System financial statements may be accessed via the Federal Reserve Board's website at http://www.federalreserve.gov/monetarypolicy/bst_fedfinancials.htm

For media inquiries, call 202-452-2955.

March 14, 2012
Federal Reserve Survey Provides Information on Mobile Financial Services

One out of five American consumers used their mobile phone to access their bank account, credit card, or other financial account in the 12 months ending in January 2012 and an additional one out of five indicated they would likely use mobile banking at some point in the future, according to a Federal Reserve Board survey (2.5 MB PDF).

The survey's findings suggest that the use of mobile banking is poised to expand further over the next year, with usage possibly increasing to one out of three mobile phone users by 2013. However, the survey indicates that many consumers remain skeptical of the benefit of mobile banking and the level of security associated with the technology.

The use of mobile banking is highly correlated with age, according to the survey results. People between 18 and 29 account for approximately 44 percent of mobile banking users, relative to 22 percent of all mobile phone users. Conversely, people age 60 and over account for only 6 percent of all mobile banking users, but 24 percent of mobile phone users. The survey showed a significantly higher level of mobile banking uptake among African Americans (16 percent) and Hispanics (17 percent), relative to 11 percent and 13 percent of mobile phone users, respectively.

The widespread use of mobile technology has the potential to expand access to financial services for previously underserved populations. Underbanked individuals (people with bank accounts but who use check cashers, payday lenders, or payroll cards) make relatively heavy use of mobile banking, according to the survey. Of this group, 29 percent used mobile banking in the year ending in January 2012.

The survey found that the most common mobile banking activities are consumers checking their account balances or monitoring recent transactions. Less frequently used mobile banking functions include making online bill payments from a bank account, locating an in-network automated teller machine, and depositing a check by phone.

The majority of consumers who have a mobile phone but do not use mobile banking said they either had no need for these services or expressed security concerns. When asked to rate the security of mobile banking, non-users were more likely to report that they believed it was unsecure or that they simply didn't know how secure the technology was.

The survey was conducted on behalf of the Board by Knowledge Networks, an online consumer research firm. Data collection began December 22, 2011, and was concluded on January 9, 2012. Nearly 2,300 respondents completed the survey.

For media inquiries, call 202-452-2955.

March 13, 2012
Federal Reserve Announces Summary Results of Latest Round of Bank Stress Tests

The Federal Reserve on Tuesday announced summary results of the latest round of bank stress tests, which show that the majority of the largest U.S. banks would continue to meet supervisory expectations for capital adequacy despite large projected losses in an extremely adverse hypothetical economic scenario.

The Federal Reserve in the Comprehensive Capital Analysis and Review (CCAR) evaluates the capital planning processes and capital adequacy of the largest bank holding companies. This exercise includes a supervisory stress test to evaluate whether firms would have sufficient capital in times of severe economic and financial stress to continue to lend to households and businesses.

Reflecting the severity of the stress scenario--which includes a peak unemployment rate of 13 percent, a 50 percent drop in equity prices, and a 21 percent decline in housing prices--losses at the 19 bank holding companies are estimated to total $534 billion during the nine quarters of the hypothetical stress scenario. The aggregate tier 1 common capital ratio, which compares high-quality capital to risk-weighted assets, falls from 10.1 percent in the third quarter of 2011 to 6.3 percent in the fourth quarter of 2013 in the hypothetical stress scenario. That number incorporates the firms' proposals for planned capital actions such as dividends, share buybacks, and share issuance.

Despite the large hypothetical declines, the post-stress capital level in the test exceeds the actual aggregate tier 1 common ratio for the 19 firms prior to the government stress tests conducted in the midst of the financial crisis in early 2009, and reflects a significant increase in capital during the past three years. In fact, despite the significant projected capital declines, 15 of the 19 bank holding companies were estimated to maintain capital ratios above all four of the regulatory minimum levels under the hypothetical stress scenario, even after considering the proposed capital actions, such as dividend increases or share buybacks.¹

It's important to note that the Federal Reserve's stress scenario estimates are the outcome of deliberately stringent and conservative assessments under hypothetical, adverse economic conditions and the results are not forecasts or expected outcomes.

Strong capital levels are critical to ensuring that banking organizations have the ability to lend and to continue to meet their financial obligations, even in times of economic difficulty. U.S. firms have built up their capital levels under the Federal Reserve's leadership since the government stress tests in 2009. The 19 bank holding companies that participated in those tests and in the 2011 and 2012 CCAR have increased their tier 1 common capital levels to $759 billion in the fourth quarter of 2011 from $420 billion in the first quarter of 2009. The tier 1 common ratio for these firms, which compares high-quality capital to risk-weighted assets, has increased to a weighted average of 10.4 percent from 5.4 percent.

The stronger capital position reflects in part substantially lower capital distributions by bank holding companies, a result of the Federal Reserve's move to ensure the firms reduced or eliminated dividends to maintain safety and soundness. Following the first CCAR in 2011, the Federal Reserve allowed those financial institutions with well-developed capital plans and capital positions that would remain strong even under adverse conditions to increase distributions, but at a prudent pace that would ensure continued increases in capital. The 19 institutions paid out 15 percent of net income in common dividends in 2011 compared with a payout of 38 percent of net income in 2006. They also raised more in common equity than they repurchased in 2011.

The stress test is just one component of the Federal Reserve's evaluation of a bank holding company's proposal to make capital distributions. Other considerations include the strength of the firm's capital planning processes and plans to meet international capital agreements as new requirements are phased in beginning in 2013.

Methodology and Results for Stress Scenario Projections (PDF)

For media inquiries, call 202-452-2955

^1. The capital plans rule stipulates that the firms must demonstrate their ability to maintain tier 1 common ratios above 5 percent. Further, the minimum levels for firms to be considered adequately capitalized are 4 percent for the tier 1 ratio, 8 percent for the total capital ratio, and 3 or 4 percent for the tier 1 leverage ratio, depending on whether the institution is subject to the market risk capital charge. Ratios can be found on table 3 of the attached paper.

March 13, 2012
Federal Reserve Issues FOMC Statement

Information received since the Federal Open Market Committee met in January suggests that the economy has been expanding moderately. Labor market conditions have improved further; the unemployment rate has declined notably in recent months but remains elevated. Household spending and business fixed investment have continued to advance. The housing sector remains depressed. Inflation has been subdued in recent months, although prices of crude oil and gasoline have increased lately. Longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects moderate economic growth over coming quarters and consequently anticipates that the unemployment rate will decline gradually toward levels that the Committee judges to be consistent with its dual mandate. Strains in global financial markets have eased, though they continue to pose significant downside risks to the economic outlook. The recent increase in oil and gasoline prices will push up inflation temporarily, but the Committee anticipates that subsequently inflation will run at or below the rate that it judges most consistent with its dual mandate.

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

The Committee also decided to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Sarah Bloom Raskin; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who does not anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate through late 2014.

March 12, 2012
Federal Reserve Releases Paper Describing Methodology Used in 2012 Comprehensive Capital Analysis and Review Stress Test

The Federal Reserve on Monday released a paper describing the methodology used in the stress test in the 2012 Comprehensive Capital Analysis and Review (CCAR) as well as the templates for disclosure of the summary results, which will be issued at 4:30 p.m. EDT on Thursday, March 15.

The CCAR is a rigorous exercise to evaluate the capital planning processes and capital adequacy of the largest bank holding companies. This exercise includes a supervisory stress test to evaluate whether firms would have sufficient capital in times of severe economic and financial stress to continue to lend to households and businesses. The Federal Reserve estimated revenue and losses under the stress scenario based on detailed data provided by the firms and verified by supervisors. The CCAR draws on the expertise of hundreds of staff throughout the Federal Reserve System, including supervisors, economists, markets analysts, and others.

The supervisory stress scenario for CCAR 2012, which was designed in November 2011, depicts a severe recession in the United States, including a peak unemployment rate of 13 percent, a 50 percent drop in equity prices, and a 21 percent decline in housing prices. The supervisory stress scenario is not the Federal Reserve's forecast for the economy, but was designed to represent an outcome that, while unlikely, may occur if the U.S economy were to experience a deep recession at the same time that economic activity in other major economies contracted significantly.

The Federal Reserve evaluates institutions' capital plans across a range of criteria, including a stress test that examines whether a firm could make all the capital distributions included in its plan--such as dividends and stock repurchases--while still maintaining capital above the Federal Reserve's standards in a hypothetical supervisory stress scenario. Other considerations for capital distributions include an evaluation of the firms' capital planning processes and plans to meet international capital agreements as new requirements are phased in beginning in 2013. The stress-test results, including projected capital ratios, revenues, and losses in the supervisory stress scenario, will be disclosed for the 19 large bank holding companies that participated.

To illustrate the impact of the stress scenario alone, the Federal Reserve also calculated stressed capital ratios including planned capital actions through March 31, 2012, but excluding proposed actions for the remainder of the stress scenario horizon and assuming no material capital issuances from March 16 through March 31, 2012. Those results will also be disclosed.

Strong capital levels are critical to ensuring that banking organizations have the ability to lend and to continue to meet their financial obligations, even in times of economic difficulty. U.S. firms have built up their capital levels under the Federal Reserve's leadership since government stress tests were conducted in early 2009. The 19 bank holding companies that participated in those tests and in the 2011 and 2012 CCAR have increased their tier 1 common capital levels to $759 billion in the fourth quarter of 2011 from $420 billion in the first quarter of 2009. The tier 1 common ratio for these firms, which compares high-quality capital to risk-weighted assets, has increased to a weighted average of 10.4 percent from 5.4 percent.

The increase reflects in part substantially lower capital distributions by bank holding companies, a result of the Federal Reserve's move to ensure the firms reduced or eliminated dividends to maintain safety and soundness. Following the CCAR in 2011, the Federal Reserve allowed those financial institutions with well-developed capital plans and capital positions that would remain strong even under adverse conditions to increase distributions, but at a prudent pace that would ensure continued increases in capital. The 19 institutions paid out 15 percent of net income in common dividends in 2011 after paying out 38 percent of net income in 2006. They also raised more in common equity than they repurchased in 2011.

For media inquiries, call 202-452-2955

Methodology for Stress Scenario Projections (PDF)
Template of Estimates of Minimum Tier 1 Common Ratios (PDF)
Template of Supervisory Stress Scenario Tables (PDF)

March 08, 2012
Federal Reserve Board Releases Action Plans for Three Supervised Financial Institutions to Correct Deficiencies in Residential Mortgage Loan Servicing and Foreclosure Processing

The Federal Reserve Board on Thursday released action plans for three supervised financial institutions to correct deficiencies in residential mortgage loan servicing and foreclosure processing. The three institutions are HSBC North America Holdings, Inc., Ally Financial Inc., and IMB HoldCo. LLC.

The Federal Reserve also released the engagement letter between HSBC and the independent consultant HSBC retained to review foreclosures that were in process in 2009 and 2010.

The action plans and engagement letters are required by formal enforcement actions issued by the Federal Reserve last year. The Federal Reserve first released a group of action plans and engagement letters on February 27. Release of the action plans and engagement letters follows reviews conducted from November 2010 to January 2011, in which examiners found unsafe and unsound processes and practices in residential mortgage loan servicing and foreclosure processing at a number of supervised institutions.

The Federal Reserve anticipates that more engagement letters and action plans will be released soon.

For media inquiries, call 202-452-2955

Action plans and engagement letter

March 02, 2012
Federal Reserve Board Issues Guidance for Evaluating whether Banking Organizations Are Eligible for Upgrades of Supervisory Ratings

The Federal Reserve Board on Friday issued guidance to ensure that supervisors apply consistent standards as they evaluate whether banking organizations with $10 billion or less in assets are eligible for upgrades of supervisory ratings.

The guidance is being issued to ensure that upgrades occur in a timely manner when the banking organizations have made the requisite progress in addressing any supervisory concerns that had prompted lower ratings. To be eligible for an upgrade, banks are expected to demonstrate, among other things, improvement in financial condition and risk management, as well as show that such improvement is likely to continue.

For media inquiries, call 202-452-2955

Attachment (31 KB PDF)

March 02, 2012
Federal Reserve Board Extends Comment Period on Proposed Rule to Implement Enhanced Prudential Standards and Early Remediation Requirements

The Federal Reserve Board on Friday extended the comment period until April 30, 2012, on a proposed rule to implement the enhanced prudential standards and early remediation requirements in the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The proposal includes a wide range of measures addressing issues such as capital, liquidity, single counterparty credit limits, stress testing, risk management, and early remediation requirements. The Board extended the comment period to allow interested persons more time to analyze the issues and prepare their comments. Originally, comments were due by March 31, 2012.

For media inquiries, call 202-452-2955.

Attachment (44 KB PDF)

February 27, 2012
Fed Releases Plans for Some Financial Institutions to Revise Residential Mortgage Loan Servicing, Foreclosure Processing

The Federal Reserve Board on Monday released action plans for supervised financial institutions to correct deficiencies in residential mortgage loan servicing and foreclosure processing. It also released engagement letters between supervised financial institutions and independent consultants retained by the firms to review foreclosures that were in process in 2009 and 2010.

The action plans are required by formal enforcement actions issued by the Federal Reserve last year. The enforcement actions direct mortgage loan servicers regulated by the Federal Reserve to submit acceptable plans that describe, among other things, how the institutions will strengthen communications with borrowers by providing each borrower the name of a primary point of contact at the servicer; establish limits on foreclosures where loan modifications have been approved; establish robust, third-party vendor controls; and strengthen compliance programs.

The Federal Reserve enforcement actions also require the parent holding companies of mortgage servicers to submit acceptable plans that describe, among other things, how the companies will improve oversight of servicing and foreclosure processing conducted by bank and nonbank subsidiaries.

The enforcement actions further require the mortgage servicing subsidiaries to provide appropriate remediation to borrowers who suffered financial injury as a result of errors by the servicers. The engagement letters describe the procedures that will be followed by the independent consultants in reviewing servicers' foreclosure files to determine whether borrowers suffered financial injury as a result of servicer error.

Release of the action plans and engagement letters follows reviews conducted from November 2010 to January 2011, in which examiners found unsafe and unsound processes and practices in residential mortgage loan servicing and foreclosure processing at a number of supervised institutions.

The Federal Reserve will closely follow the implementation of action plans to ensure that the financial institutions correct deficiencies and evaluate any harm that was done to homeowners in the foreclosure process in 2009 and 2010. The Federal Reserve anticipates that more engagement letters and action plans will be posted soon.

Action plans and engagement letters

February 15, 2012
Minutes of the Federal Open Market Committee, January 24-25, 2012

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on January 24–25, 2012. A summary of economic projections made by Federal Reserve Board members and Reserve Bank presidents for the January 24–25, 2012 meeting is also included as an addendum to these minutes.

The minutes for each regularly scheduled meeting of the Committee ordinarily are made available three weeks after the day of the policy decision and subsequently are published in the Board's Annual Report. Summaries of economic projections are released on an approximately quarterly schedule. The descriptions of economic and financial conditions contained in these minutes and in the Summary of Economic Projections are based solely on the information that was available to the Committee at the time of the meeting.

The FOMC minutes can be viewed on the Board's website at http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm

Minutes of the Federal Open Market Committee
January 24-25, 2012: PDF | HTML

For media inquiries, call 202-452-2955.

February 15, 2012
Agencies Extend Deadline to Request Review Under the Independent Foreclosure Review to July 31

WASHINGTON--People seeking a review of their mortgage foreclosures under the Federal banking agencies' Independent Foreclosure Review now have until July 31, 2012, to submit their requests.

The Office of the Comptroller of the Currency (OCC) and the Board of Governors of the Federal Reserve System (Federal Reserve) today announced that the deadline for submitting requests for review under the Independent Foreclosure Review has been extended. The new deadline, July 31, 2012, provides an additional three months for borrowers to request a review if they believe they suffered financial injury as a result of errors in foreclosure actions on their homes in 2009 or 2010 by one of the servicers covered by enforcement actions issued in April 2011.

The deadline extension provides more time to increase awareness of how eligible people may request a review through the Independent Foreclosure Review process and to encourage the broadest participation possible.

As part of enforcement actions issued in April 2011, the OCC, Federal Reserve, and the Office of Thrift Supervision required 14 large mortgage servicers to retain independent consultants to conduct a comprehensive review of foreclosure activity in 2009 and 2010 to identify borrowers who may have been financially injured due to errors, misrepresentations, or other deficiencies in the foreclosure process. If the review finds that financial injury occurred, the borrower may receive compensation or other remedy.

Borrowers are eligible for an Independent Foreclosure Review if they meet the following basic criteria:

• The mortgage loan was serviced by one of the participating mortgage servicers.
• The mortgage loan was active in the foreclosure process between January 1, 2009 and December 31, 2010.
• The property securing the mortgage loan was the borrower's primary residence.

Participating mortgage servicers include: America's Servicing Company, Aurora Loan Services, BAC Home Loans Servicing, Bank of America, Beneficial, Chase, Citibank, CitiFinancial, CitiMortgage, Countrywide, EMC, Everbank/Everhome Mortgage Company, Financial Freedom, GMAC Mortgage, HFC, HSBC, IndyMac Mortgage Services, MetLife Bank, National City Mortgage, PNC Mortgage, Sovereign Bank, U.S. Bank, Wachovia Mortgage; Washington Mutual, Wells Fargo; and Wilshire Credit Corporation.

There are no costs associated with being included in the review. For more information, borrowers can call 888-952-9105, Monday through Friday, 8 a.m.-10 p.m. ET or Saturday, 8 a.m.-5 p.m. ET or visit www.federalreserve.gov/consumerinfo/independent-foreclosure-review.htm or www.occ.gov/independentforeclosurereview.

February 13, 2012
Federal Reserve Board Releases Orders Related to the Previously Announced Monetary Sanctions Against Five Banking Organizations

The Federal Reserve Board on Monday released the orders related to the previously announced monetary sanctions against five banking organizations for unsafe and unsound processes and practices in residential mortgage loan servicing and processing. The Board reached an agreement in principle with these organizations for monetary sanctions totaling $766.5 million on February 9, 2012.

Attachments:
Ally Financial Inc. (PDF)
Bank of America Corporation (PDF)
Citigroup Inc. (PDF)
JPMorgan Chase & Co. (PDF)
Wells Fargo & Company (PDF)

For media inquiries, call 202-452-2955

February 09, 2012
Federal Reserve Board Announces Agreement in Principle with Five Banking Organizations Regarding the Issuance of Monetary Sanctions

The Federal Reserve Board on Thursday announced that it has reached an agreement in principle with five banking organizations regarding the issuance of monetary sanctions against the organizations totaling $766.5 million. The monetary sanctions would be assessed for unsafe and unsound processes and practices in residential mortgage loans servicing and foreclosure processing. These deficiencies were identified by examiners during reviews conducted from November 2010 to January 2011. The deficiencies represented unsafe and unsound practices at these five institutions and corrective measures were required by formal enforcement actions issued against the institutions on April 13, 2011.

The Board will assess monetary sanctions against the parent holding companies of the five largest mortgage servicers supervised by federal banking regulators for failure to appropriately oversee their subsidiaries' mortgage loan servicing and foreclosure processing operations. Those parent holding companies are Bank of America Corp., Citigroup Inc., Ally Financial, Inc., JPMorgan Chase & Co., and Wells Fargo & Co. The Board will also assess monetary sanctions against the two mortgage servicers owned by JPMorgan Chase and Ally Financial that are subject to the Board's jurisdiction for the servicers' failures. Those servicers are GMAC Mortgage, LLC a subsidiary of Ally Financial, Inc., and EMC Mortgage Corporation, a subsidiary of JPMorgan Chase & Co.

The amounts of the monetary sanctions to be levied by the Board against these institutions are as follows:

The amount of the sanctions assessed against each organization takes into account the maximum amount prescribed for unsafe and unsound practices under the applicable statutory limits, the comparative severity of the institutions' misconduct, and the comparative sizes of the institutions' foreclosure activities. The executed assessment orders will be released shortly.

In agreeing to issue the more than $766.5 million in monetary sanctions, the Board is acting in conjunction with a comprehensive settlement agreed in principle between the five banking organizations, the state Attorneys General, and the Department of Justice on February 9, 2012 ("Settlement Agreement"). The Settlement Agreement requires these organizations to provide $25 billion in payments and other designated types of monetary assistance and remediation to residential mortgage borrowers. The Settlement Agreement amount includes the Board's monetary sanctions. In an effort to facilitate a broad settlement of related state and federal claims, and to obtain an agreement that will maximize the effectiveness of assistance provided through an integrated set of remedial programs, the Board decided to participate with federal and state regulatory and law enforcement authorities in a joint settlement.

Under the terms of the Board's agreement in principle, the banking organizations must pay to the Board for remittance by the Board to the U.S. Treasury the amount of the sanction not expended by the organization within two years in providing borrower assistance or remediation in compliance with the Settlement Agreement ("Borrower Assistance"), or on a program, acceptable to the Federal Reserve, to provide funding for nonprofit housing counseling organizations for counseling to borrowers who are facing default or foreclosure or in connection with borrower remediation set forth in the independent foreclosure reviews required by the April 13 enforcement actions ("Counseling Program"). The Federal Reserve will closely monitor expenditures on Borrower Assistance and the Counseling Program and compliance by the five banking organizations with the requirements of the monetary sanctions issued by the Board.

In 2011, enforcement actions were also issued against another six institutions supervised by the Federal Reserve for unsafe and unsound processes and practices in residential mortgage loan servicing and foreclosure processing. Although the Federal Reserve is not issuing monetary sanctions against those six institutions at this time or against the two thrift holding companies now under the Federal Reserve's jurisdiction that control mortgage servicing subsidiaries, the Federal Reserve believes that monetary sanctions in those cases are appropriate and plans to announce monetary penalties against them.

The actions issued in April required the banking organizations that have servicing entities regulated by the Federal Reserve to, among other things, submit plans acceptable to the Federal Reserve to correct the many deficiencies in residential mortgage loan servicing and foreclosure processing. Those plans must, among other things, strengthen the coordination of communications with borrowers by providing borrowers the name of the person at the service who is their primary point of contact, establish limits on foreclosures where loan modifications have been approved, establish robust third party vendor controls, strengthen compliance programs, and provide appropriate remediation to borrowers who suffered financial injury as a result of errors by the servicers. In addition, the enforcement actions issued in April required the parent holding companies to submit plans acceptable to the Federal Reserve to improve holding company oversight of residential mortgage loan servicing and foreclosure processing conducted by bank and nonbank subsidiaries. Those plans must, among other things, strengthen board of directors' oversight over residential mortgage servicing activities, and enhance enterprise-wide risk management, compliance, and internal audit programs.

The corrective plans must be acceptable to the Federal Reserve. We expect to publish the action plans shortly. The Federal Reserve will continue to closely monitor the conduct of the foreclosure review and the institutions' implementation of the plans, and will take additional enforcement actions as needed.

2012 Enforcement Actions

January 31, 2012
Agencies Issue Guidance on Junior Lien Loan Loss Allowances

Four federal financial regulatory agencies on Tuesday issued supervisory guidance on allowance for loan and lease losses (ALLL) estimation practices associated with loans and lines of credit secured by junior liens on one- to four-family residential properties.

The agencies issued the guidance to reiterate policy and to remind regulated financial institutions to monitor all credit quality indicators relevant to credit portfolios, including junior liens. Examples of junior liens include second mortgages and home equity lines of credit taken out by mortgage borrowers.

The Federal Reserve Board, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency reiterate key concepts included in generally accepted accounting principles and existing ALLL supervisory guidance related to the ALLL and loss estimation practices. Regulators also remind institutions to follow appropriate risk-management principles in managing junior lien loans and lines of credit.

Attachment (201 KB PDF)

January 25, 2012
Federal Reserve Issues FOMC Statement of Longer-Run Goals and Policy Strategy

Following careful deliberations at its recent meetings, the Federal Open Market Committee (FOMC) has reached broad agreement on the following principles regarding its longer-run goals and monetary policy strategy. The Committee intends to reaffirm these principles and to make adjustments as appropriate at its annual organizational meeting each January.

The FOMC is firmly committed to fulfilling its statutory mandate from the Congress of promoting maximum employment, stable prices, and moderate long-term interest rates. The Committee seeks to explain its monetary policy decisions to the public as clearly as possible. Such clarity facilitates well-informed decisionmaking by households and businesses, reduces economic and financial uncertainty, increases the effectiveness of monetary policy, and enhances transparency and accountability, which are essential in a democratic society.

Inflation, employment, and long-term interest rates fluctuate over time in response to economic and financial disturbances. Moreover, monetary policy actions tend to influence economic activity and prices with a lag. Therefore, the Committee's policy decisions reflect its longer-run goals, its medium-term outlook, and its assessments of the balance of risks, including risks to the financial system that could impede the attainment of the Committee's goals.

The inflation rate over the longer run is primarily determined by monetary policy, and hence the Committee has the ability to specify a longer-run goal for inflation. The Committee judges that inflation at the rate of 2 percent, as measured by the annual change in the price index for personal consumption expenditures, is most consistent over the longer run with the Federal Reserve's statutory mandate. Communicating this inflation goal clearly to the public helps keep longer-term inflation expectations firmly anchored, thereby fostering price stability and moderate long-term interest rates and enhancing the Committee's ability to promote maximum employment in the face of significant economic disturbances.

The maximum level of employment is largely determined by nonmonetary factors that affect the structure and dynamics of the labor market. These factors may change over time and may not be directly measurable. Consequently, it would not be appropriate to specify a fixed goal for employment; rather, the Committee's policy decisions must be informed by assessments of the maximum level of employment, recognizing that such assessments are necessarily uncertain and subject to revision. The Committee considers a wide range of indicators in making these assessments. Information about Committee participants' estimates of the longer-run normal rates of output growth and unemployment is published four times per year in the FOMC's Summary of Economic Projections. For example, in the most recent projections, FOMC participants' estimates of the longer-run normal rate of unemployment had a central tendency of 5.2 percent to 6.0 percent, roughly unchanged from last January but substantially higher than the corresponding interval several years earlier.

In setting monetary policy, the Committee seeks to mitigate deviations of inflation from its longer-run goal and deviations of employment from the Committee's assessments of its maximum level. These objectives are generally complementary. However, under circumstances in which the Committee judges that the objectives are not complementary, it follows a balanced approach in promoting them, taking into account the magnitude of the deviations and the potentially different time horizons over which employment and inflation are projected to return to levels judged consistent with its mandate.

January 25, 2012
Federal Reserve Board and Federal Open Market Committee Release Economic Projections From the January 24-25 FOMC meeting

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached table and charts summarizing the economic projections and the target federal funds rate projections made by Federal Reserve Board members and Federal Reserve Bank presidents for the January 24–25 meeting of the Committee.

The table will be incorporated into a summary of economic projections released with the minutes of the January 24–25 meeting. Summaries of economic projections are released on an approximately quarterly schedule.

Attachment (PDF)

For media inquiries, call 202-452-2955.

January 25, 2012
Federal Reserve Issues FOMC Statement

Information received since the Federal Open Market Committee met in December suggests that the economy has been expanding moderately, notwithstanding some slowing in global growth. While indicators point to some further improvement in overall labor market conditions, the unemployment rate remains elevated. Household spending has continued to advance, but growth in business fixed investment has slowed, and the housing sector remains depressed. Inflation has been subdued in recent months, and longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects economic growth over coming quarters to be modest and consequently anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that over coming quarters, inflation will run at levels at or below those consistent with the Committee's dual mandate.

To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

The Committee also decided to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Sarah Bloom Raskin; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who preferred to omit the description of the time period over which economic conditions are likely to warrant exceptionally low levels of the federal funds rate.

January 20, 2012
Federal Reserve Releases Templates for Reporting FOMC Participants’ Projections of the Appropriate Target Federal Funds Rate

The Federal Reserve on Friday released blank templates showing the format of the two charts it will use on January 25 to report Federal Open Market Committee (FOMC) participants' projections of the appropriate target federal funds rate. It also released a draft of an explanatory note that will accompany the projections.

The first chart, which will have shaded bars when released on January 25, will show FOMC participants' projections for the timing of the initial increase in the target federal funds rate. The second chart, which will have dots representing policymakers' individual projections when released on January 25, will show participants' views of the appropriate path of the federal funds rate over the next several years and in the longer run.

For media inquiries, call 202-452-2955.

Attachment (89 KB PDF)

January 10, 2012
Federal Reserve Announces Results of Auction of $3 Billion in 28-day Term Deposits Held on January 9, 2012

On January 9, 2012, the Federal Reserve conducted an auction of $3 billion in 28-day term deposits through its Term Deposit Facility. Following are the results of the auction:

Bids at the stop-out rate were pro-rated at 5.85 percent. Resulting awards were rounded to the nearest $10,000 except that all awards below $10,000 were rounded up to $10,000.

The awarded deposits will settle on January 12, 2012, and will mature on February 9, 2012. The stop-out rate shown above will apply to all awarded deposits.

January 10, 2012
Reserve Bank Income and Expense Data and Transfers to the Treasury for 2011

The Federal Reserve Board on Tuesday announced preliminary unaudited results indicating that the Reserve Banks provided for payments of approximately $76.9 billion of their estimated 2011 net income to the U.S. Treasury. Under the Board's policy, the residual earnings of each Federal Reserve Bank, after providing for the costs of operations, payment of dividends, and the amount necessary to equate surplus with capital paid-in, are distributed to the U.S. Treasury.

The Federal Reserve Banks' 2011 estimated net income of $78.9 billion was derived primarily from $83.6 billion in interest income on securities acquired through open market operations (U.S. Treasury securities, federal agency and government-sponsored enterprise (GSE) mortgage-backed securities, and GSE debt securities). Additional earnings were derived primarily from realized gains on the sale of U.S. Treasury securities of $2.3 billion, foreign currency gains of $152 million, and income from services of $479 million. The Reserve Banks had interest expense of $3.8 billion on depository institutions' reserve balances and term deposits.

Operating expenses of the Reserve Banks, net of amounts reimbursed by the U.S. Treasury and other entities for services the Reserve Banks provided as fiscal agents, totaled $3.4 billion in 2011. In addition, the Reserve Banks were assessed $1.1 billion for the cost of new currency and Board expenditures and $282 million to fund the operations of the Bureau of Consumer Financial Protection and Office of Financial Research. In 2011, statutory dividends totaled $1.6 billion and $375 million of net income was used to equate surplus to capital paid-in.

The preliminary unaudited results include valuation adjustments as of September 30 for Term Asset–Backed Loan Facility (TALF) loans and consolidated limited liability companies, which were created in response to the financial crisis. The final results, which will be presented in the Reserve Banks' annual audited financial statements and the Board of Governors' Annual Report, will reflect valuation adjustments as of December 31.

The attached chart illustrates the amount of Federal Reserve Banks' residual earnings distributed to the U.S. Treasury from 2002 through 2011 (estimated).

Attachment (71 KB PDF)

January 04, 2012
Federal Reserve Offers $3 Billion in 28-Day Term Deposits through Its Term Deposit Facility

On Monday, January 9, 2012, the Federal Reserve will offer $3 billion in 28-day term deposits through its Term Deposit Facility. As noted in the Federal Reserve Board's September 8, 2010 release, this offering is part of ongoing small-value operations designed to provide eligible institutions with an opportunity to become familiar with term deposit operations. Additional information regarding the auction is listed below; the auction will be conducted as specified in this announcement, Regulation D, and the terms and conditions of the Term Deposit Facility (http://www.frbservices.org/centralbank/term_deposit_facility.html).

Description of Offering and Competitive Auction Parameters

Competitive bids submitted at the stop-out rate will be pro-rated and will be rounded to multiples of $10,000. Normal rounding convention will be used, except that awards under $10,000 will be rounded to $10,000.

Non-Competitive bids are allowed in this auction. All non-competitive bids will be automatically awarded in full at the stop-out rate of the competitive auction. The minimum amount for a non-competitive bid is $10,000; the maximum amount is $5,000,000 and should be submitted in increments of $10,000. Non-Competitive bids must be submitted between 10:00 a.m. ET and 2:00 p.m. ET on the auction date.

Submission of Bids
Participants must submit bids by accessing the Term Deposit Facility application (https://www.federalreserve.org/arrow/ARROWWeb/home.do) between the opening time and the closing time on the auction date.

Notification
Summary auction results will be published on the Board of Governors' website (http://www.federalreserve.gov/monetarypolicy/tdf.htm) at approximately 12:00 p.m. (noon) ET on the notification date. Soon after, results will be posted on the Term Deposit Facility Resource Center page of the Central Bank Central website (http://www.frbservices.org/centralbank/term_deposit_facility.html). Participant awards will be posted to the Term Deposit Facility application at approximately 12:00 p.m. ET on the notification date, and participants will be able to view their awards by accessing the Term Deposit Facility application.

January 03, 2012
Minutes of the Federal Open Market Committee, November 28 and December 13, 2011

The Federal Reserve Board and the Federal Open Market Committee on Tuesday released the attached minutes of the Committee meeting held on December 13, 2011 and of the conference call held on November 28, 2011.

The minutes for each regularly scheduled meeting of the Committee ordinarily are made available three weeks after the day of the policy decision and subsequently are published in the Board's Annual Report. The descriptions of economic and financial conditions contained in these minutes are based solely on the information that was available to the Committee at the time of the meeting.

The FOMC minutes can be viewed on the Board's website at http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm

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